The Secondary Market for Syndicated Loans

We document an active secondary market for shares in syndicated term loans using confidential supervisory data. While most of the literature examines trades near origination, this paper is the first to study the secondary market throughout the life cycle of a syndicated term loan. We establish novel empirical facts about the post-origination trading of loan shares and identify key participants and their trading patterns. We characterize the determinants of an active secondary market, the turnover of lender shares, and the resulting credit exposure allocations. Increased non-bank participation correlates with increased trading activity during the life cycle of a syndicated loan.