Price discrimination on syndicated loans and the number of lenders : empirical evidence from the sovereign debt syndication

  • Syndicated loans and the number of lending relationships have raised growing attention. All other terms being equal (e.g. seniority), syndicated loans provide larger payments (in basis points) to lenders funding larger amounts. The paper explores empirically the motivation for such a price discrimination on sovereign syndicated loans in the period 1990-1997. First evidence suggests larger premia are associated with renegotiation prospects. This is consistent with the hypothesis that price discrimination is aimed at reducing the number of lenders and thus the expected renegotiation costs. However, larger payment discrimination is also associated with more targeted market segments and with larger loans, thus minimising borrowing costs and/or attempting to widen the circle of lending relationships in order to successfully raise the requested amount. JEL Classification: F34, G21, G33 This version: June, 2002. Later version (october 2003) with the title: "Why Borrowers Pay Premiums to Larger Lenders: Empirical Evidence from Sovereign Syndicated Loans" :

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Author:Issam Hallak
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2002,02
Series (Serial Number):CFS working paper series (2002, 02)
Document Type:Working Paper
Year of Completion:2002
Year of first Publication:2002
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:Number of lenders; Price discrimination; Sovereign debt; Syndicated loans
GND Keyword:Auslandskredit; Bundesanleihe; Konsol; Staatsanleihe; Zwangsanleihe; Preisdifferenzierung; Preisdiskriminierung; Effektenbank; Emissionsgeschäft; Kosten
Issue:Version June, 2002
Page Number:26
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht