The Dollar and Corporate Borrowing Costs

Friederike Niepmann, Ralf Meisenzahl and Tim Schmidt-Eisenlohr

No 14892, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 determine 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: 2020-06
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The Dollar and Corporate Borrowing Costs (2021)
Working Paper: The Dollar and Corporate Borrowing Costs (2020)
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