WORLD CORPORATE LOAN MARKETS FOR RAISING NEW CAPITAL – DOES DISTANCE STILL MATTER: ARE FINANCIAL ASSETS PRICED LOCALLY OR GLOBALLY?

Abstract

Though the paper focuses on pricing, as the background I provide some evidence about loan flows across markets in the form of borrowers’ and lenders’ propensity to issue outside their natural home market. The data show that borrowers stay home when they can and that they tend to issue in Europe when they must issue abroad. That is, borrowers domiciled in one of the major markets (Europe, U.S., and Asia) almost always issue in that market, whereas borrowers in more remote locations usually issue in the European market. For example, borrowers from Latin America are overwhelmingly issuing in Europe rather than in the U.S. market.