The cost of firms’ debt financing and the global financial crisis
AbstractWe provide an assessment of the determinants of the risk premium paid by non-financial corporations on long-term bonds. By looking at 5,500 issues in the period 2005-2012, we find that the turbulence in the sovereign debt market has been a major driver of corporate risk in recent years. Compared with 2005-07, the three years preceding the global financial crisis, in 2010-12 Italian, Spanish and Portuguese firms paid an additional premium of between 70 and 120 basis points on average due to the negative spillovers from the sovereign debt crisis, while German firms received a discount of 40 basis points.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 950.
Date of creation: Feb 2014
Date of revision:
corporate bonds; risk-premium; too-big-to-fail; sovereign debt crisis;
Other versions of this item:
- Pianeselli, Daniele & Zaghini, Andrea, 2014. "The cost of firms’ debt financing and the global financial crisis," Finance Research Letters, Elsevier, vol. 11(2), pages 74-83.
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-08 (All new papers)
- NEP-CFN-2014-03-08 (Corporate Finance)
- NEP-EEC-2014-03-08 (European Economics)
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