Securities Laws, Bank Monitoring, and the Choice Between Cov-lite Loans and Bonds for Highly Levered / Robert Prilmeier, René M. Stulz.

Format:

Book

Author/Creator:

Prilmeier, Robert.

Contributor:

National Bureau of Economic Research.

Stulz, René M.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25467.

NBER working paper series no. w25467

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

In contrast to bonds, cov-lite loans do not require SEC registration and are not subject to securities laws. We show that this distinction plays an important role in firms' choice between funding through cov-lite loans and bonds and helps understand why the market share of cov-lite loans has been so high in recent normal times. Compared to cov-heavy loans, cov-lite loans are closer substitutes for bonds in that they have similar covenants, have tighter bid-ask spreads, have more trading, and are more likely to be used to refinance bonds than cov-heavy loans.

Notes:

Print version record

January 2019.