The Underwriter Relationship and Corporate Debt Maturity

Supply-side frictions impact corporate debt maturity choices. Similar to bank loan markets, corporate debt markets exhibit repeated issuance relationships between underwriters and issuers. Using micro-data on investor-underwriter-issuer relationships, we uncover significant frictions in the U.S. public corporate debt markets, even though firms issuing corporate debt often have relatively easier access to capital. Firm debt maturity is more sensitive to underwriter preferences than to a firm’s past debt maturity. Firm issuance amounts decrease with an increase in the maturity preference mismatch between firms and underwriters. Supply-side frictions in the corporate debt market lead to slower lending and firm asset growth.