Angel Tengulov
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Tengulov
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Angel
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+41 71 224 7411

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Publication

Creditor Control Rights and the Pricing of Private Loans

, Arnold, Marc , Kollmann, Nicola , Tengulov, Angel

This paper investigates the influence of creditor control rights on the pricing of corporate loans. We construct a novel dataset, which combines hand-collected covenant violations data with individual borrower, creditor, and loan contract information. Our data allows us to distinguish between creditors that receive direct control rights after a covenant violation and creditors that do not receive control rights after a violation. By comparing the loan terms of these two creditor types, we can isolate the impact of creditor control rights on loan pricing from the impact of other factors related to a covenant violation. We find that creditors exploit control rights to overprice new loans, and that this rent extraction is a key determinant of the loan premium puzzle.

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Publication

Creditor Control Rights and the Pricing of Private Loans

, Arnold, Marc , Kollmann, Nicola , Tengulov, Angel

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Publication

Do Loans Carry a Control Spread? Evidence from the Allocation of Control Rights Across Creditors

2023-10-13 , Marc Arnold , Nicola Kollmann , Angel Tengulov

This study investigates the influence of creditor control rights on the pricing of corporate loans. Using a novel hand-collected dataset, we differentiate between individual creditors who receive and do not receive control rights after a covenant violation. This differentiation allows us to isolate the influence of shifts in control rights on loan pricing from that of other factors related to covenant violations. We find that creditors exploit control rights to overprice new loans and that this pricing friction in the loan market is of first-order importance in explaining the variation in loan prices and the loan premium puzzle.

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