Boardroom Briefing – Factors Influencing Access and the Price of Funding in the Syndicated Loan and Corporate Bond Markets

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Date(s) - 07/05/14
10:00am - 11:00am


ACFS/Finsia Office
L46, Rialto South Tower, 525 Collins Street

Speaker: Philip Bayley, Doctor of Philosophy, Monash University

In a post-GFC environment where companies are seeking to diversify sources of term debt funding and seeking advice on the options available, this presentation is very topical. Derived from research undertaken on the impact of the syndicated loan market on the development of the domestic corporate bond market, it is shown that borrower financial characteristics and product features will influence a choice between syndicated loans and corporate bonds for term debt funding. Oligopolistic competition is found to exist between the four major banks but the syndicated loan market operates under conditions of near perfect competition. Nevertheless, corporate bonds are found to be a cheaper source of term debt funding than syndicated loans, for those companies that can access the corporate bond market. However, the pricing of syndicated loans will be competitive when corporate bond issuance is an option. No evidence is found of loss-leader pricing of syndicated loans but borrowers without term debt funding options are at risk of being “held-up” by their bankers. In this respect borrowers without a credit rating will incur a significant economic cost on their term debt funding. The existence of a credit rating removes doubt about the credit quality of the borrower and signals to its bankers that it has term debt funding options.

About the Speaker:

Philip Bayley received his PhD and Bachelor of Business from Monash University.  Philip also holds an MBA from the University of Melbourne.

He is currently a Director at Australia Ratings and publishes The DCM Review.

Philip has been in the financial services industry for over 20 years with positions previously held at Westpac Banking Corporation, National Australia Bank and Standard & Poor’s.

Philip is growing his consulting business and since 2010 has undertaken consulting across Credit rating agencies, superannuation funds and managers and acts as an expert witness.

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