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Global syndicated lending during the COVID-19 pandemic

Iftekhar Hasan (), Panagiotis Politsidis and Zenu Sharma

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Syndicated loans; Cost of credit; COVID-19; Pandemic (search for similar items in EconPapers)
JEL-codes: G01 G21 G29 G3 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-ban and nep-cfn
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https://mpra.ub.uni-muenchen.de/106942/1/MPRA_paper_106942.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/107016/1/MPRA_paper_106942.pdf revised version (application/pdf)

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