The overall evidence suggests that a co-lead syndicate structure helps dual lead arrangers to address potential agency problems with participant lenders and facilitate loan syndication. Book Runner: The book runner is the main underwriter or lead manager in the issuance of new equity, debt or securities instruments, and in investment banking, the book runner is the underwriting. We also explore the hierarchy within the lead arranger group, and find that dual holding by dominant lead arrangers is more likely to invite subordinate lead arrangers without dual holdings but with expertise in the borrowers’ industry. Empirical findings are consistent with our hypothesis and are unlikely explained by the endogeneity of lead arrangers’ dual holding status. Syndicated loans are employed in various situations from 50 million Swiss francs upwards. The syndicated loan structure typically involves a lead arranger, or agent, who spearheads the loan arrangement and facilitates communication between the borrower and the syndicate of lenders. As lead arrangers’ simultaneous holding of borrowers’ equity (hereafter, dual holding) exacerbates potential agency problems within a syndicate, we hypothesize that a co-lead syndicate structure is more likely to be used when syndicated loans involve lead arrangers with dual holding. Syndicated loan financing is used to raise a large amount of debt capital via the banking market. We postulate that a co-lead syndicate structure, by allowing multiple lead arrangers to collaborate and monitor each other, can mitigate agency problems between lead and participant lenders. Global Loans (Mandated Lead Arranger) Q1 2020 Q1 2019 Firm Rank Mkt Share() Volume (USD Mln) Deal Count Prev Rank Prev Mkt Share() Mkt Share Chg() JP Morgan 1 10.023 85,657 287 1 8.735 1.288 BofA Securities 2 9.836 84,057 315 2 7.167 2.669 Citi 3 6.389 54,595 191 4 4.290 2. Usually, the lead bank is also the arranger. A syndicated loan involves either a single lead arranger who takes charge of the screening and monitoring of borrowers or multiple lead arrangers who jointly conduct the syndication tasks. The lead bank underwrites a larger share of the syndicated loan, ranking the highest among managers.
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