Journal of Finance Vol. 45 No. 5 1990

Determinants of Secondary Market Prices for Developing Country Syndicated Loans

Ekkehart Boehmer; William L. Megginson¹

¹ Both authors are from the University of Georgia. We are grateful to Bill Beranek, Mary Dehner, Janet Hunt, Tom Lindley, Jim Musumeci, Kenneth Rogoff, Louis Scott, Joe Sinkey, Rene Stulz (the editor), Drew Winters, an anonymous referee, and especially, David Blackwell for their helpful comments and r

Abstract

This paper presents our investigation of the factors that determine secondary market prices of developing country syndicated loans. Trading volume in this market has almost doubled yearly from 1985 to 1988 while average market prices declined from 73% to 41% of par value during the same period. We find that loan values depend on a country's solvency rather than its liquidity and show that a country's adoption of a debt conversion program significantly decreases its loans' market prices. Furthermore, the debt moratoria by Brazil and Peru, as well as the developing-country-specific provisions made by U.S. banks, impact loan prices negatively.

DOI

10.2307/2328748

Volume

45

Issue

5

Pages

1517

Sources

openalex crossref

Cite

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