Do Lead Arrangers Retain Their Lead Shares?

Blickle, Kristian S.; Fleckenstein, Quirin; Hillenbrand, Sebastian; Saunders, Anthony

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Do Lead Arrangers Retain Their Lead Shares?

Abstract: We examine how lead arrangers’ ownership stakes in syndicated loans evolve after origination, complementing prior research on lead shares at origination. Lead arrangers tend to retain shares in bankheld loans but frequently sell shares in loans distributed to institutional investors, typically within days of origination. The frequency of these loan sales has increased over time, aligning with the rise of the originate-to-distribute model. Importantly, we find no evidence that loan sales are associated with worse performance. Additional evidence suggests that exposure through other loans, temporary retention during syndication, and reputation concerns help mitigate information asymmetries in the syndicated loan market.

JEL Classification: G21; G24; G30;