The Value of Bond Underwriter Relationships

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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.
Original languageEnglish
Publication date2018
Number of pages44
Publication statusPublished - 2018
Event2018 Financial Management Association European Conference - University of Agder, Kristiansand, Norway
Duration: 13 Jun 201815 Jun 2018


Conference2018 Financial Management Association European Conference
LocationUniversity of Agder
Internet address


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

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