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Discussion Paper
The Ins and Outs of Collateral Re-Use
In this article, we empirically document how primary dealers use and re-use collateral (that is, financial securities) in the United States.
Discussion Paper
Interest Coverage Ratios: Assessing Vulnerabilities in Nonfinancial Corporate Credit
This note examines whether the ability of nonfinancial corporations to meet their interest expenses out of earnings is a vulnerability for financial stability under current economic conditions. We measure this ability using the interest coverage ratio (ICR)—the ratio of earnings before interest and taxes relative to interest expenses—and project this ratio under different scenarios.
Working Paper
Pre-LBO Credit Market Conditions and Post-LBO Target Behavior
In the context of leveraged buyouts (LBOs), this paper empirically studies the relation between pre-buyout credit market conditions and the post-buyout behavior of target companies, employing a supervisory dataset to overcome limited data availability for post-buyout target financial information. We propose an LBO-specific measure of (changes of) credit market conditions---the short-term (6-month) change of credit spreads leading up to buyout close. Using this proposed measure, we show that loosening pre-LBO credit market conditions, which are related to higher buyout leverage consistent with ...