Global syndicated lending during the COVID-19 pandemic

Hasan, Iftekhar and Politsidis, Panagiotis N. and Sharma, Zenu (2021): Global syndicated lending during the COVID-19 pandemic.

Abstract

This paper examines the pricing of global syndicated loans during the COVID-19 pandemic. We find that loan spreads rise by over 11 basis points in response to a one standard deviation increase in the lender’s exposure to COVID-19 and over 5 basis points for an equivalent increase in the borrower’s exposure. This implies excess interest of about USD 5.16 million and USD 2.37 million respectively for a loan of average size and duration. The aggravating effect of the pandemic is exacerbated with the level of government restrictions to tackle the virus’s spread, with firms’ financial constraints and reliance on debt financing, whereas it is mitigated for relationship borrowers, borrowers listed in multiple exchanges or headquartered in countries that can attract institutional investors.

• Item Type: MPRA Paper
• Language: English
• Keywords: Syndicated loans, Cost of credit, COVID-19, Pandemic
• Subjects: G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G29 - Other; G - Financial Economics > G3 - Corporate Finance and Governance

References

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