Bookrunner syndicate geography and the quality of service : the benefits of a local team

We analyze how the geography of bookrunner syndicates affects the quality of service provided to bond issuing firms, as reflected in the pricing of euro-denominated corporate bond tranches. We find that syndicates with a higher share of domestic bookrunners obtain lower at-issue credit spreads for issuing firms. Domestic bookrunners can have locational advantage which not only gives them better access to the investors base, it also gives them "soft" informational advantage as they are more familiar with the bond issuer. We find that the tranches issued during the financial crisis and the eurozone crisis periods drive our findings, and both certification and placement roles become important to bond issuers in these crisis periods characterised by high information asymmetry. Our results are robust to other definitions of bookrunner geography