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Ebook The handbook of credit portfolio management: Part 2

(BQ) Part 2 book "The handbook of credit portfolio management" has contents: Credit default swap and other credit derivatives: valuation and application; definition and evaluation of basket credit derivatives and single tranche collateralized debt obligation swaps; securitization of shipping loans; managing country risk,.and other contents. | C H A P T E R 1 3 What Drives the Arrangement Timetable of Bank Loan Syndication?1 Christophe J. Godlewski ABSTRACT We investigate the influence of loan and syndicate characteristics as well as banking environment factors on the arrangement timetable of global bank loan syndications. Employing accelerated failure time models, we find that loan, syndicate, legal environment, and information disclosure characteristics that mitigate agency problems related to syndication reduce the arrangement timetable. Among the banking environment factors, information disclosure, which reduces moral hazard due to informational frictions between syndicate members, appears to be the most important driver of a faster deal arrangement timetable, while better creditor rights protection increases the arrangement timetable, consistently with recontracting risk issues. 1 I thank Guillaume Horny for valuable advice regarding the econometric specification and Laurent Weill for his remarks and suggestions. The usual disclaimer applies. 223 Copyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use. 224 PART 3 Managing Credit Exposure INTRODUCTION The global syndicated lending market has reached US$2.8 trillion and 6,580 issues in the third quarter of 2006.2 Currently, syndicated loans are an important source of external finance for financial and nonfinancial companies, comparable to bond markets and often larger than equity markets. For instance, they represent 51 percent of total corporate financing in the United States. Briefly, a syndicated loan is a loan granted jointly and under common terms by a group of banks to a borrower. Usually, the borrower mandates a lead bank (the arranger) to arrange the syndication. These two agents negotiate the terms of the loan agreement. The arranger then finds participant banks that grant a share of the loan, receiving compensation in terms of fees and/or spread for this activity. Consequently, every syndicate member has a .