Journal article
The Sponsor Premium
SSRN Electronic Journal, pp 1-25
08 Sep 2026
Abstract
The diffusion of so-called liability management has underscored the importance of contractual incompleteness in debt markets. This article examines whether a private equity sponsor's reputation for fair dealing with lenders impacts the yields its portfolio companies must pay for loan capital. Using comprehensive leveraged loan data from 2016-2025, we find that sponsor fixed effects explain approximately twenty percent of the variation in loan yields that other observables cannot. Moreover, we find that, under three measures of reputation, portfolio companies owned by the most aggressive sponsors pay considerably higher yields than those owned by more genial sponsors.
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Details
- Title
- The Sponsor Premium
- Creators
- Gregory P Nini - Drexel University, FinanceVincent S.J. Buccola - University of Chicago
- Publication Details
- SSRN Electronic Journal, pp 1-25
- Number of pages
- 26
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Other Identifier
- 991022205257604721
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