The impact of lending relationships on the choice and structure of bond underwriting syndicates

This paper examines the multiple-bookrunning phenomenon by focusing on the role of firm–bank relationships. Using a sample of European corporate bonds from 2003 to 2013, we show that the existence and strength of prior firm–bank relationships affects the multiple-bookrunning choice. Firms with strong (more concentrated) lending relationships are less likely to issue a multiple-bookrunner bond. Nevertheless, during the GFC crisis, the opposite effect is found. Issuer–bank relationships have a larger impact on issuers’ selection of bookrunners during the crisis than before the crisis. However, reputable bookrunners refrain from becoming joint bookrunners if they are matching with less reputable counterparts.