Browsing by Author "Alves, Paulo P."
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- How banks price loans for LBOs: an empirical analysis of spread determinantsPublication . Alves, Paulo P.; Cunha, M. Ricardo; Pacheco, Luís K.; Pinto, João M.This paper examines which factors determine the pricing of loans for LBOs, using a worldwide sample of 11,111 loans closed in the 2000–2016 period. Our findings are consistent with the hypotheses that loans for LBOs extended to borrowers in market- versus bank-based financial systems are differently priced, and that law and institutional characteristics are important determinants of spreads for deals closed in market-oriented countries. Despite LBO loan pricing differing significantly in normal versus crisis times, loans extended to borrowers in market-based financial systems have higher spreads than those where banks play a major role. Our results also support the hypothesis of tranching as a mechanism of reducing spreads by completing financial markets and mitigating informational asymmetries. Finally, a robust convex relationship between spread and maturity is found, suggesting higher market competition by banks and investors for standard, medium-term maturities.
- Project finance in Europe: an overview and discussion of key driversPublication . Pinto, João M.; Alves, Paulo P.
- Structured finance and the boundaries of the firm: the case of project financePublication . Alves, Paulo P.; Pinto, João M.We examine the factors that influence public firms’ choice between project finance over internally organized investment projects. Using a large sample of syndicated deals closed between 2000 and 2020 in conjunction with Datastream data, we find that economies of scale, agency costs of debt, and information asymmetry arguments affect the choice of on- versus off-balance-sheet funding. As project finance deals have higher borrowing costs than comparable corporate financing deals, we show that other firm-level countervailing benefits play a key role in the sponsoring firms’ choice: borrowers choose project over corporate financing when they are relatively larger, less profitable and creditworthy, and seek long-term financing; and switchers resorting to project finance tend be more levered and to have larger growth opportunity sets.