Authors: Kristian S. Blickle, Quirin Fleckenstein, Sebastian Hillenbrand, and Anthony Saunders
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Staff Reports
The Myth of the Lead Arranger’s Share
Number 922
May 2020 Revised October 2022
May 2020 Revised October 2022
JEL classification: G21, G24, G30
We challenge theories that lead arrangers retain shares of syndicated loans to overcome information asymmetries. Lead arrangers frequently sell their entire loan stake—in over 50 percent of term and 70 percent of institutional loans. These selloffs usually occur days after origination, with lead arrangers retaining no other borrower exposure in 37 percent of selloff cases. Counter to theories, sold loans perform better than retained loans. Our results imply that information asymmetries could be lower than commonly assumed or mitigated by alternative mechanisms such as underwriting risk. We also provide guidance for Dealscan users on how to approximate loan ownership after origination.
Author Disclosure Statement(s)
Kristian Blickle
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Quirin Fleckenstein
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Sebastian Hillenbrand
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Anthony Saunders
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Quirin Fleckenstein
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Sebastian Hillenbrand
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Anthony Saunders
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York and SNC data review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
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