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Distressed Debt Restructuring in the Presence of Credit Default Swaps

Abstract : The availability of credit insurance via credit default swaps has been closely associated with the emergence of empty creditors. We empirically investigate this issue by looking at the debt restructurings (distressed exchanges and bankruptcy filings) of rated, nonfinancial U.S. companies over the period January 2007–June 2011. Using different proxies for the existence of insured creditors, we do not find evidence that the access to credit insurance favors bankruptcy over a debt workout. However, we document higher recovery prices following a distressed exchange in firms where empty creditors are more likely to emerge.
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Submitted on : Tuesday, January 26, 2016 - 3:42:34 PM
Last modification on : Tuesday, January 18, 2022 - 2:26:05 PM

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Mascia Bedendo, Lara Cathcart, Lina El-Jahel. Distressed Debt Restructuring in the Presence of Credit Default Swaps. Journal of Money, Credit and Banking, Wiley, 2016, 48 (1), pp.165-201. ⟨10.1111/jmcb.12294⟩. ⟨hal-01262323⟩



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