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European mezzanine

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  • Martijn de Ruijter Korver
  • Steven Ongena

Abstract

Recently, mezzanine financing has been growing rather dramatically in Europe. We describe the characteristics of European mezzanine, the developments of the UK and Continental European mezzanine markets and the various financial instruments that are traded in the European market. We further study in detail a comprehensive dataset of recent European mezzanine deals, and analyse the determinants of the mezzanine credit spread on these deals employing a credit spread model recently used by Angbazo et al. (1998). We find that credit spreads on European mezzanine loans are lower for shorter maturity, term or bridge loans. Credit spreads further react sluggishly to corporate bond yields but do not react to their syndication.

Suggested Citation

  • Martijn de Ruijter Korver & Steven Ongena, 2008. "European mezzanine," Applied Financial Economics, Taylor & Francis Journals, vol. 18(20), pages 1613-1622.
    • Handle: RePEc:taf:apfiec:v:18:y:2008:i:20:p:1613-1622
    DOI: 10.1080/09603100801949744
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    1. Flannery, Mark J, 1986. "Asymmetric Information and Risky Debt Maturity Choice," Journal of Finance, American Finance Association, vol. 41(1), pages 19-37, March.
    2. Esty, Benjamin C. & Megginson, William L., 2003. "Creditor Rights, Enforcement, and Debt Ownership Structure: Evidence from the Global Syndicated Loan Market," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(1), pages 37-60, March.
    3. Linn, Scott C. & Stock, Duane R., 2005. "The impact of junior debt issuance on senior unsecured debt's risk premiums," Journal of Banking & Finance, Elsevier, vol. 29(6), pages 1585-1609, June.
    4. Kenneth D. Garbade, 2001. "Pricing Corporate Securities as Contingent Claims," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262072238, December.
    5. Angbazo, Lazarus A. & Mei, Jianping & Saunders, Anthony, 1998. "Credit spreads in the market for highly leveraged transaction loans," Journal of Banking & Finance, Elsevier, vol. 22(10-11), pages 1249-1282, October.
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    Cited by:

    1. Ilya Kuzminov & Dirk Meissner & Alina Lavrynenko & Elena Tochilina, 2018. "Technology Classification for the Purposes of Futures Studies," HSE Working papers WP BRP 78/STI/2018, National Research University Higher School of Economics.

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