A new paper from the U.S. Federal Reserve Board offers evidence that syndicated corporate loan spreads are significantly smaller in Europe than in the U.S., by about 30 basis points.

The paper’s authors, Mark Carey and Greg Nini, say that systematic differences across the two markets in loan and borrower characteristics do not appear to account for the pricing difference.

The nationality of the firm doesn’t matter much either, as the relatively small number of U.S. firms that issue in the European market pay European-market spreads, not U.S.-market spreads.

“These and other facts cast doubt on many potential explanations drawn from the literature on financial intermediation, including explanations focusing on differences in asymmetric information and moral hazard, creditor rights, multi-product pricing discounts, rating dynamics, and regulation,” they say.

Very few U.S. issuers go abroad to issue debt, they note, but Canadian firms appear a little more willing to embrace global markets. Canadian firms issue 19% of their foreign loans in the European market, “which is surprising given the tight integration of U.S. and Canadian financial markets.”

“Borrowers overwhelmingly issue in their natural home market, and bank portfolios display significant home bias. This may explain why pricing discrepancies are not competed away, but the fundamental causes of the discrepancies remain a puzzle,” they conclude.

“Our evidence indicates that economically important aspects of financial intermediation and corporate finance remain to be discovered. That is, loans made in the European and U.S. markets may differ materially along some dimension that is relevant to price but that has received little attention.”