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Journal of Banking & Finance Vol. 133 2021

Global syndicated lending during the COVID-19 pandemic

Iftekhar Hasan1,2,3; Panagiotis N. Politsidis4; Zenu Sharma5

1 Fordham University · 2 Bank of Finland · 3 University Bank · 4 Audencia Business School · 5 St. John's University

open access

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 interestof 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.

DOI
10.1016/j.jbankfin.2021.106121
Volume
133
Pages
106121
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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