Debt Analyst Coverage of Private Firms

This study examines how information spillovers from equity to debt markets ("equity spillovers") affect sell-side debt analysts' activities and the informativeness of their reports. To explore this relation, I compare debt analyst reports for firms without equity spillovers (private firms) to firms with equity spillovers (public firms). I find that, absent equity spillovers, analysts rely more on mandatory SEC filings to fill the information gap for private firms. This additional effort, however, reduces debt analysts' coverage of private firms overall. Conditional on coverage, the content of debt analyst reports is remarkably similar across private and public firms. Finally, I find that debt analyst reports are more informative for private firms than for public firms. Collectively, my findings shed light on the externalities created by equity spillovers and how debt market intermediaries contribute to the price discovery process.