On the pricing, wealth effects and return of private market debt

The essays collected in this PhD thesis concern the pricing, wealth effects and return of private market debt, which has grown tremendously over the last two decades. Increasingly, companies are seeking flexible terms of private funding rather than capital from public capital markets. The first essay shows how private placement bonds are priced and provides evidence how the use of covenants affects the cost of capital. The second essay examines how the use of restrictive covenants impacts shareholder wealth ex ante and in the context of issuing privately placed bonds. The third essay investigates the risk and return of private debt funds and their persistence across subsequent funds of a partnership.