Financial Contracting and the Choice between Private Placement and Publicly Offered Bonds
AbstractThe financial contracting in private placement bonds and publicly offered bonds are different. Our data show that private placement bonds are more likely to have restrictive covenants than public bonds. Private placement bonds are also more likely to be issued by smaller and riskier firms. For investment-grade firms that issue bonds in both markets, our analysis shows that firms select the bond type to minimize financing costs. We find significant differences in the pricing of private placement and publicly offered bonds, and some of these differences appear to be related to the different institutional features between the two markets. Copyright (c) 2010 The Ohio State University.
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Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 42 (2010)
Issue (Month): 5 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
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- Qian Wang, 2012. "The choice between publicly issued and privately placed preferred stocks," Managerial Finance, Emerald Group Publishing, vol. 38(7), pages 689-701.
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