Concentration of control rights in leveraged loan syndicates

• 成果类型: Article
• 署名作者: Berlin, Mitchell; Nini, Greg; Yu, Edison G.
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Philadelphia; Drexel University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2020.02.002
• 发表日期: 2020
• 页码: 249-271
• 关键词: Covenant; Cov-lite; Institutional loans; Control rights; Credit agreements

摘要

We find that corporate loan contracts frequently concentrate control rights with a subset of lenders. Despite the rise in term loans without financial covenants-so-called covenant-lite loans-borrowing firms' revolving lines of credit almost always retain traditional financial covenants. This split structure gives revolving lenders the exclusive right and ability to monitor and to renegotiate the financial covenants, and we confirm that loans with split control rights are still subject to the discipline of financial covenants. We provide evidence that split control rights are designed to mitigate bargaining frictions that have arisen with the entry of nonbank lenders and became apparent during the financial crisis. (C) 2020 Elsevier B.V. All rights reserved.