In the cutthroat world of risky loans, a private equity firm's aggressive reputation during times of corporate distress carries a steeper price tag: 60 basis points, to be precise. That's one finding of a new academic paper, "The Sponsor Premium," co-authored by Vincent Buccola of the University of Chicago Law School and Greg Nini of Drexel University.

The study examines how lender behavior shifts when dealing with private equity sponsors known for playing hardball during corporate distress situations. These firms face higher borrowing costs as lenders demand additional compensation for perceived risk.

The research highlights the financial consequences of aggressive private equity tactics in loan negotiations. Firms with reputations for aggressive behavior during distress events see their loan pricing reflect this risk premium.

The findings suggest that private equity firms' strategic choices during corporate distress have measurable impacts on their cost of capital, with the 60 basis point spread representing a significant financial penalty for aggressive sponsor behavior.