The Value of Bond Underwriter Relationships

Publikation: KonferencebidragPaperForskningpeer review

Resumé

We show that corporate bond issuers benefit from utilizing existing underwriter relationships when rolling over bonds, but at the same time become exposed to underwriter distress. A strong relationship enables the underwriter to credibly certify the issuer resulting in lower direct issuance costs and lower underpricing. However, if the underwriter becomes distressed, this spills over to the issuer's credit risk, because it weakens the relationship and increases the risk of involuntary relationship termination. The credit risk spillover is more pronounced for risky, opaque issuers with high rollover exposure, i.e., those issuers most in need of certification by an underwriter.
OriginalsprogEngelsk
Publikationsdato2017
Antal sider44
StatusUdgivet - 2017
BegivenhedThe 15th International Paris December Finance Meeting - Novotel Paris les Halles hotel, Paris, Frankrig
Varighed: 21 dec. 201721 dec. 2017
Konferencens nummer: 15
https://www.eurofidai.org/fr/paris-december-2017

Konference

KonferenceThe 15th International Paris December Finance Meeting
Nummer15
LokationNovotel Paris les Halles hotel
LandFrankrig
ByParis
Periode21/12/201721/12/2017
Internetadresse

Emneord

  • Underwriter relationship
  • Corporate bonds
  • Certification
  • Rollover risk
  • Relationship banking

Citer dette

Daetz, S. L., Dick-Nielsen, J., & Nielsen, M. S. (2017). The Value of Bond Underwriter Relationships. Afhandling præsenteret på The 15th International Paris December Finance Meeting, Paris, Frankrig.
Daetz, Stine Louise ; Dick-Nielsen, Jens ; Nielsen, Mads Stenbo. / The Value of Bond Underwriter Relationships. Afhandling præsenteret på The 15th International Paris December Finance Meeting, Paris, Frankrig.44 s.
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Daetz, SL, Dick-Nielsen, J & Nielsen, MS 2017, 'The Value of Bond Underwriter Relationships' Paper fremlagt ved The 15th International Paris December Finance Meeting, Paris, Frankrig, 21/12/2017 - 21/12/2017, .

The Value of Bond Underwriter Relationships. / Daetz, Stine Louise ; Dick-Nielsen, Jens; Nielsen, Mads Stenbo.

2017. Afhandling præsenteret på The 15th International Paris December Finance Meeting, Paris, Frankrig.

Publikation: KonferencebidragPaperForskningpeer review

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AU - Dick-Nielsen, Jens

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N2 - We show that corporate bond issuers benefit from utilizing existing underwriter relationships when rolling over bonds, but at the same time become exposed to underwriter distress. A strong relationship enables the underwriter to credibly certify the issuer resulting in lower direct issuance costs and lower underpricing. However, if the underwriter becomes distressed, this spills over to the issuer's credit risk, because it weakens the relationship and increases the risk of involuntary relationship termination. The credit risk spillover is more pronounced for risky, opaque issuers with high rollover exposure, i.e., those issuers most in need of certification by an underwriter.

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KW - Underwriter relationship

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KW - Certification

KW - Rollover risk

KW - Relationship banking

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KW - Corporate bonds

KW - Certification

KW - Rollover risk

KW - Relationship banking

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Daetz SL, Dick-Nielsen J, Nielsen MS. The Value of Bond Underwriter Relationships. 2017. Afhandling præsenteret på The 15th International Paris December Finance Meeting, Paris, Frankrig.