This study examines the effect of bank loan monitoring on public bond contract design. We find that bond yield spreads are lower and that bond issuance amounts are larger when a borrower has recently obtained a private loan, consistent with bond issuers benefiting from the screening and ongoing...

The financial instability stemming from large volumes of simultaneous selling in the corporate bond market has been a topic of concern in recent years. Investors in this market care primarily about the downside risk of a firm given their concave payoff function, and this is precisely the...