Bank financing and credit ratings
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By looking at a sample of firms rated by S&P, we study the extent to which the mix between bank financing and other sources of debt affects corporate credit ratings. We find that S&P penalizes firms of high credit quality that use relatively more bank debt compared to market debt. Instead, debt composition does not seem to matter when rating risky firms. We conclude that managers of firms of high credit quality should have relatively low (high) recourse of bank financing (public debt) from a credit ratings perspective.
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Boreiko D; Kaniovski S; Kaniovski Y; Pflug GC (2018)To quantify the impact of business cycles on the dynamics of credit ratings, conditional migration matrices and probabilities of the corresponding macroeconomic scenarios are estimated. The approach is tested on a Standard ...
Cerasi V; Fedele A; Miniaci R (2017)In a model where firms rely on bank financing to build capacity, put up specialized productive assets as collateral, and then compete à la Cournot, we introduce a probability of default. We investigate how the number of ...