In this study, we try to understand whether the soft information provided by the language of the contract in private loan contracts is instructive with regard to borrower risk. We proxy for soft credit risk information with Loughran and McDonald`s (2011) Uncertainty measure. We first look at the terms of the original contract and find that the increment of core credit risk ratios is associated with increased contractual uncertainty, higher initial credit spreads and a higher likelihood of using dynamic and efficient price pacts. We then take in to look at the credit risk over the life of the loan and find that increased uncertainty is associated with a higher probability of future credit downgrades and credit changes. We confirm our results with respect to the relevance of soft risk information, showing that spreads of loans traded on the secondary market are increasingly resulting in uncertainties. Overall, the evidence we provide is consistent with the language references incorporated in the loan contracts that publicly disclose the credit ratings of informed private lenders. . 2100 Neil AvenueColumbus, OH 43210-1144 UNITED States614-292-4101 (Telephone) 46 pages Posted: 23 Dec 2016 Last change: 1 June 2018 If you have access to a magazine about a company or association, please visit your issue newspaper, choose an article to see and instructions in this field. . Corporate law: Corporate law and financial law: Interdisciplinary approaches eJournal .

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