Eurobond Underwriter Spreads
AbstractWe examine the determinants of underwriter spreads on straight/fixed rate Eurobonds issued by U.S. firms between 1990 and 1998. We find that underwriter spreads are influenced by: (i) the governing law as it influences the timely and orderly renegotiation of contract terms, with bonds governed by English law having significantly lower spreads; (ii) the distribution mechanism, with spreads higher on public issues than private placements; (iii) underwriter reputation, with more reputable underwriters charging higher fees; and (iv) the choice of currency, with spreads higher in the less frequently utilized currencies and/or in currencies where underwriting activities are more concentrated.
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Bibliographic InfoPaper provided by Financial Markets Group in its series FMG Discussion Papers with number dp503.
Date of creation: Jun 2004
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- Kollo, Michael G., 2005. "Underwriter competition and gross spreads in the eurobond market," Working Paper Series 0550, European Central Bank.
- Burch, Timothy R. & Nanda, Vikram & Warther, Vincent, 2005. "Does it pay to be loyal? An empirical analysis of underwriting relationships and fees," Journal of Financial Economics, Elsevier, vol. 77(3), pages 673-699, September.
- de Jong, Abe & Roosenboom, Peter & Schramade, Willem, 2006. "Bond underwriting fees and keiretsu affiliation in Japan," Pacific-Basin Finance Journal, Elsevier, vol. 14(5), pages 522-545, November.
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