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Underpricing of Newly Issued Bonds: Evidence from the Swiss Capital Market

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  • Wasserfallen, Walter
  • Wydler, Daniel
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    Abstract

    The pricing of newly issued bonds on the Swiss capital market is investigated over the years 1980-82. The results reveal a slight underpricing of new bonds at the issue date that is roughly equal to the difference in transactions costs between the markets for new and seasoned bonds. Underpricing is no longer observed when the new bonds start to be traded on the stock exchange, that is, after about two days. Tests of several hypothesis show that unexpected changes in interest rates over the offering period explain part of the underpricing. Copyright 1988 by American Finance Association.

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    Bibliographic Info

    Article provided by American Finance Association in its journal Journal of Finance.

    Volume (Year): 43 (1988)
    Issue (Month): 5 (December)
    Pages: 1177-91

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    Handle: RePEc:bla:jfinan:v:43:y:1988:i:5:p:1177-91

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    Cited by:
    1. Jun-Koo, Kang & Lee, Yul W., 1996. "The pricing of convertible debt offerings," Journal of Financial Economics, Elsevier, vol. 41(2), pages 231-248, June.
    2. Arie Melnik & Doron Nissim, 2003. "Debt issue costs and issue characteristics in the Eurobond market," ICER Working Papers 09-2003, ICER - International Centre for Economic Research.

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