We analyze the determinants of covenant structure in private debt contracts. While previous studies have demonstrated a … for a debt contract to specify a restriction on investment or to specify a minimum cash flow realization. Consistent with … results also highlight the importance of debt covenants in both mitigating agency frictions and maximizing the value of future …

Private debt contracts tend to have covenants that restrict future investment, restrict capital structure decisions, or … face uncertain cash flows and investment opportunities, we characterize the conditions under which it is optimal for a debt … importance of debt covenants in both mitigating agency frictions and maximizing the value of future private information …

We analyze the empirical determinants of liquidity in debt markets in light of predictions stemming from debt …, including those that predict a``hockey-stick" relation between bond liquidity and underlying fundamental value. When debt is … towards the left tail, the value of debt becomes informationally sensitive and less liquid. We alleviate endogeneity concerns …

Models based on asymmetric information predict that debt is least sensitive to private information and cannot explain … the illiquidity of corporate debt in secondary markets. We analyze security design with moral hazard and offer a new … hazard problem, but makes debt less liquid than equity. Debt illiquidity covaries with credit risk …