The cost of firms' debt financing
We provide an assessment of the determinants of the risk premia paid by non-financial corporations on long-term bonds. By looking at 5,500 issues over the period 2005-2012, we find that in recent years the sovereign debt market turbulence has been a major driver of corporate risk. Compared with the three-year period 2005-07 before the global financial crisis, in the years 2010-12 Italian, Spanish and Portuguese firms paid on average between 70 and 120 basis points of additional premium due to the negative spillovers from the sovereign debt crisis, while German firms got a discount of 40 basis points.
|Date of creation:||2013|
|Contact details of provider:|| Postal: House of Finance, Grüneburgplatz 1, HPF H5, D-60323 Frankfurt am Main|
Phone: +49 (0)69 798-30050
Fax: +49 (0)69 798-30077
Web page: http://www.ifk-cfs.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sironi, Andrea, 2003.
" Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 35(3), pages 443-472, June.
- Andrea Sironi, 2000. "Testing for market discipline in the European banking industry: evidence from subordinated debt issues," Finance and Economics Discussion Series 2000-40, Board of Governors of the Federal Reserve System (U.S.).
- Denis, David J. & Mihov, Vassil T., 2003. "The choice among bank debt, non-bank private debt, and public debt: evidence from new corporate borrowings," Journal of Financial Economics, Elsevier, vol. 70(1), pages 3-28, October.
- Cantillo, Miguel & Wright, Julian, 2000. "How Do Firms Choose Their Lenders? An Empirical Investigation," Review of Financial Studies, Society for Financial Studies, vol. 13(1), pages 155-189.
- Miguel Cantillo & Julian Wright, 1998. "How Do Firms Choose Their Lenders? An Empirical Investigation," Finance 9803007, EconWPA.
- Cantillo, Miguel & Wright, Julian, 2000. "HOw Do Firms Choose Their Leaders? An Empirical Investigation," Research Program in Finance, Working Paper Series qt8sd393sj, Research Program in Finance, Institute for Business and Economic Research, UC Berkeley.
- Miguel Cantillo and Julian Wright., 2000. "How Do Firms Choose Their Lenders? An Empirical Investigation," Research Program in Finance Working Papers RPF-256-Rev, University of California at Berkeley.
- Giuseppe Grande & Aviram Levy & Fabio Panetta & Andrea Zaghini, 2012. "Public Guarantees on Bank Bonds: Effectiveness and Distortions," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2011(2), pages 47-72.
- Gerlach, Stefan & Schulz, Alexander & Wolff, Guntram B., 2010. "Banking and Sovereign Risk in the Euro Area," CEPR Discussion Papers 7833, C.E.P.R. Discussion Papers.
- Gerlach, Stefan & Schulz, Alexander & Wolff, Guntram B., 2010. "Banking and sovereign risk in the euro area," Discussion Paper Series 1: Economic Studies 2010,09, Deutsche Bundesbank, Research Centre.
- Barry, Christopher B. & Mann, Steven C. & Mihov, Vassil & Rodríguez, Mauricio, 2009. "Interest rate changes and the timing of debt issues," Journal of Banking & Finance, Elsevier, vol. 33(4), pages 600-608, April.
- Edwin J. Elton, 2001. "Explaining the Rate Spread on Corporate Bonds," Journal of Finance, American Finance Association, vol. 56(1), pages 247-277, 02.
- Sebastian Schich & Sofia Lindh, 2012. "Implicit guarantees for bank debt: where do we stand?," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2012(1), pages 45-63.
- Joost Driessen, 2005. "Is Default Event Risk Priced in Corporate Bonds?," Review of Financial Studies, Society for Financial Studies, vol. 18(1), pages 165-195.
- Blackwell, David W. & Kidwell, David S., 1988. "An investigation of cost differences between public sales and private placements of debt," Journal of Financial Economics, Elsevier, vol. 22(2), pages 253-278, December.
- Pierre Collin-Dufresne, 2001. "The Determinants of Credit Spread Changes," Journal of Finance, American Finance Association, vol. 56(6), pages 2177-2207, December. Full references (including those not matched with items on IDEAS)