Stabsseminar med Pierre Mella-Barral

Institutt for foretaksøkonomi holder stabsseminar med Pierre Mella-Barral fra London Business School fredag 24. mai.

22.05.2002 - Per Arne Solend

Tema: Repeated Dilution of Diffusely Held Debt
Tid og sted: Fredag 24. mai, kl. 12.15-13.30 i aud B.

Abstract
Debt with many creditors is analyzed in a continuous-time pricing model
of the levered firm in the presence of corporate taxes. We specifically
allow for debtor opportunism in form of repeated strategic renegotiation
offers and default threats. Dispersed creditors will only accept coupon
concessions in exchange for guaranteed liquidation rights, e.g.
collateral. The ex ante optimal debt contract is secured with assets
which gradually become worthless as the firm approaches the preferred
liquidation conditions, in order to allow for sufficient, but delayed
renegotiability. Compared with single-creditor debt, dispersed debt
offers a larger debt capacity, and it is preferable ex-ante if the value
of collateralizable assets is then reduced. Our model can explain credit
risk premia in excess of those supported by a single creditor model with
opportunistic renegotiation.

Paper er tilgjengelig på instituttets hjemmeside, http://www.nhh.no/for/seminars/2002-spring/240502.pdf.