Dissertation: Marketing Corporate Debt
12.12.2012
M.Sc. Timo Teinilä’s dissertation studies how large corporate borrowers market their debt. The study explores debt marketing through the sets of activities and tools, as described in the narratives of interviews with and data on the debt of 23 different large firms on five continents.
Corporate debt is widely studied in economics, finance and accounting, but there is still little understanding about how it is actually marketed to lenders. Some even question if a corporate borrower is actually a seller or a buyer when borrowing. As a product, debt can be described in the language of marketing, but marketing academia’s lack of interest has persisted despite calls to study corporate treasures’ solicitation of loans from a marketing perspective. Mr. Teinilä’s dissertation describes the various debt activities in marketing terminology, and shows how they interact to form a set of activities constituting a firm’s debt marketing. The emphasis in corporate debt marketing is on a broad range of communication activities, and on the establishment and maintenance of the distribution channel for a firm’s debt. Product design and pricing activities have lower emphasis as corporate debt marketing activities.
In their debt marketing, large corporate borrowers apply three different practices; often simultaneously (a) asset-based debt marketing, (b) capital markets practice, and (c) bank debt marketing. These practices reflect different approaches that are not mutually exclusive. Asset based debt marketing starts with debt products designed to match a borrower’s specific assets, and at least partially then also sold to investors based on those specific assets’ merits. In capital markets practice, firms are proactive sellers of their debt to institutional investors, and develop actively direct relationships with them. In bank debt marketing, banks are approached both as lenders and as intermediaries placing firms’ debt to other debt investors. Banks are also seen as a supplier of a range of services, and debt availability form them is linked to firms’ purchase of other services from banks. The use of these three practices is reflected in three patterns, in each of which one of the aforementioned practices has a leading role, but the two others are also present. These debt marketing patterns are called (a) asset-driven borrowers, (b) full-range marketers, and (c) intermediated borrowers, respectively.
The study shows that large firms deal differently with institutional debt investors and banks. Towards institutional debt investors, large firms are clearly sellers of their debt. Dealings with banks are more complex, as firms are at the same time buying various services from banks, and selling themselves as good borrowers to banks. Generally, large firms are comfortable in dealing with this blurredness of buyer and seller roles when they borrow, but some role ambiguity can exist. This may even lead to missed borrowing opportunities. Relational behavior dominates in debt marketing, but firms leave room also for transactional marketing, with the two approaches shown to co-exist well.
This dissertation is a first of its kind to take a broad view on debt marketing. The study also shows variations in large corporate’ debt marketing. By studying diverse firms representing a range of contexts, the study’s findings include observations about motivations and possible shortcomings of different debt marketing behaviors. The findings also provide a basis for a critical evaluation of debt marketing practices and patterns both by academics and practitioners, and among a wider sets of firms.
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Timo Teinilä works as Lead Investment Analyst in the private sector operations of the African Development Bank in Tunis. He defended his dissertation on 16th November, 2012.
Custodian:professor Rami Olkkonen
Opponents: professor Jaakko Aspara (Aalto University) and professor Jari Salo (University of Oulu)
>> Read the thesis (pdf)
Contact information: mob. +21624480098, email teinila(a)kolumbus.fi
In their debt marketing, large corporate borrowers apply three different practices; often simultaneously (a) asset-based debt marketing, (b) capital markets practice, and (c) bank debt marketing. These practices reflect different approaches that are not mutually exclusive. Asset based debt marketing starts with debt products designed to match a borrower’s specific assets, and at least partially then also sold to investors based on those specific assets’ merits. In capital markets practice, firms are proactive sellers of their debt to institutional investors, and develop actively direct relationships with them. In bank debt marketing, banks are approached both as lenders and as intermediaries placing firms’ debt to other debt investors. Banks are also seen as a supplier of a range of services, and debt availability form them is linked to firms’ purchase of other services from banks. The use of these three practices is reflected in three patterns, in each of which one of the aforementioned practices has a leading role, but the two others are also present. These debt marketing patterns are called (a) asset-driven borrowers, (b) full-range marketers, and (c) intermediated borrowers, respectively.
The study shows that large firms deal differently with institutional debt investors and banks. Towards institutional debt investors, large firms are clearly sellers of their debt. Dealings with banks are more complex, as firms are at the same time buying various services from banks, and selling themselves as good borrowers to banks. Generally, large firms are comfortable in dealing with this blurredness of buyer and seller roles when they borrow, but some role ambiguity can exist. This may even lead to missed borrowing opportunities. Relational behavior dominates in debt marketing, but firms leave room also for transactional marketing, with the two approaches shown to co-exist well.
This dissertation is a first of its kind to take a broad view on debt marketing. The study also shows variations in large corporate’ debt marketing. By studying diverse firms representing a range of contexts, the study’s findings include observations about motivations and possible shortcomings of different debt marketing behaviors. The findings also provide a basis for a critical evaluation of debt marketing practices and patterns both by academics and practitioners, and among a wider sets of firms.
***
Timo Teinilä works as Lead Investment Analyst in the private sector operations of the African Development Bank in Tunis. He defended his dissertation on 16th November, 2012.
Custodian:professor Rami Olkkonen
Opponents: professor Jaakko Aspara (Aalto University) and professor Jari Salo (University of Oulu)
>> Read the thesis (pdf)
Contact information: mob. +21624480098, email teinila(a)kolumbus.fi