The Dollar and Corporate Borrowing Costs

Ralf R. Meisenzahl, Friederike Niepmann and Tim Schmidt-Eisenlohr

No 1312, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We show that U.S. dollar movements affect syndicated loan terms for U.S. borrowers, even for those without trade exposure. We identify the effect of dollar movements using spread and loan amount adjustments during the syndication process. Using this high-frequency, within loan variation, we find that a one standard deviation increase in the dollar index increases spreads by up to 15 basis points and reduces loan amounts and underpricing by up to 2 percent and 7 basis points, respectively. These effects are concentrated in dollar appreciations. Our results suggest that global factors reflected in the dollar affect U.S. borrowing costs.

Keywords: Loan pricing; Syndicated loans; Dollar; Institutional investors; Risk taking (search for similar items in EconPapers)
JEL-codes: F15 G15 G21 G23 (search for similar items in EconPapers)
Date: 2021-03-30
New Economics Papers: this item is included in nep-cfn
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https://www.federalreserve.gov/econres/ifdp/files/ifdp1312.pdf (application/pdf)

Related works:
Working Paper: The Dollar and Corporate Borrowing Costs (2020)
Working Paper: The Dollar and Corporate Borrowing Costs (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1312

DOI: 10.17016/IFDP.2021.1312

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