......Historically, only banks (and, of course, the government) created informationally-insensitive debt, but
the demand for such debt has grown. And, now there is a range of securities with different information
sensitivities. The notion of “informationally-insensitive” debt corresponds to the institutions that
surround debt, as distinct from equity. Equity is very informationally-sensitive. It is traded on centralized
exchanges and individual stocks are followed by analysts. Because debt is senior, and because
securitized debt is backed by portfolios (see Gorton and Pennacchi (1993a) and Gorton and Souleles
(2006)), senior tranches of securitizations are informationally-insensitive, not riskless like demand deposits
though. Informationally-insensitive debt does not need extensive institutional infrastructure, like equity.
So, for example, the job of rating agencies need not be as in-depth as equity analysts.......