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Determinants of sub-sovereign bond yield spreads: the role of fiscal fundamentals and federal bailout expectations

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  • Beck, Roland
  • Ferrucci, Gianluigi
  • Hantzsche, Arno
  • Rau-Goehring, Matthias

Abstract

This paper investigates to what extent yield spreads on bonds issued by sub-sovereign entities within federations are driven by bailout expectations and investors JEL Classification: E62, G12, H7

Suggested Citation

  • Beck, Roland & Ferrucci, Gianluigi & Hantzsche, Arno & Rau-Goehring, Matthias, 2016. "Determinants of sub-sovereign bond yield spreads: the role of fiscal fundamentals and federal bailout expectations," Working Paper Series 1987, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20161987
    Note: 597822
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    Cited by:

    1. Marco Di Pietro & Luigi Marattin & Raoul Minetti, 2021. "Public debt, sovereign spreads and the unpleasant arithmetic of fiscal consolidations," International Finance, Wiley Blackwell, vol. 24(2), pages 155-178, August.
    2. Diego Martínez‐López, 2022. "Subnational borrowing and bailouts: When the federal government looks at the votes (differently) and its borrowing matters," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(3), pages 609-633, June.
    3. Cristiana Fiorelli & Nicola Pontarollo & Carolina Serpieri, 2022. "Legislative interventions for the Italian local public financial distress," Working Papers in Public Economics 219, University of Rome La Sapienza, Department of Economics and Law.
    4. Bethlendi, András & Lentner, Csaba, 2019. "A magyar önkormányzati eladósodás és válságkezelés nemzetközi összehasonlításban [The indebtedness and crisis management of Hungarian municipalities in an international context]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1013-1030.
    5. Santiago José Pérez-Balsalobre & Carlos Llano-Verduras, 2021. "Modelling sovereign debt ratings for sub-national governments: the case of Spain before and after the crisis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(2), pages 373-395, May.
    6. Walker, Thomas & Zhang, Xueying & Zhang, Aoran & Wang, Yulin, 2021. "Fact or fiction: Implicit government guarantees in China’s corporate bond market," Journal of International Money and Finance, Elsevier, vol. 116(C).
    7. András Bethlendi & Csaba Lentner, 2018. "Subnational Fiscal Consolidation: The Hungarian Path from Crisis to Fiscal Sustainability in Light of International Experiences," Sustainability, MDPI, vol. 10(9), pages 1-16, August.
    8. van Riet, Ad, 2017. "Addressing the safety trilemma: a safe sovereign asset for the eurozone," ESRB Working Paper Series 35, European Systemic Risk Board.

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    More about this item

    Keywords

    fiscal federalism; government debt; sovereign bond spreads; sub-national governments;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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