Search for Yield in Large International Corporate Bonds: Investor Behavior and Firm Responses

Charles Calomiris, Mauricio Larrain, Sergio Schmukler and Tomas Williams

No 165, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: Emerging market corporations significantly increased their borrowing in international markets since 2008 through large bond issuances. We document a strong clustering of issuances with face value of exactly US$500 million after 2008. This reflects investor willingness to purchase emerging market bonds included in international bond indexes (requiring a minimum face value of US$500 million). Index-eligible bonds allow investors to hold more liquid securities. Firms face a tradeoff: issuing large, index-eligible bonds allows them to borrow at a lower cost at the expense of hoarding cash. Because of this "size yield discount," many companies issued index-eligible bonds, increasing cash holdings.

Keywords: benchmark indexes; bond issuance; corporate financing; emerging markets; institutional investors (search for similar items in EconPapers)
JEL-codes: F21 F23 F32 F36 F65 G11 G15 G31 (search for similar items in EconPapers)
Pages: 84
Date: 2020-08
New Economics Papers: this item is included in nep-ore
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Search for Yield in Large International Corporate Bonds: Investor Behavior and Firm Responses (2019)
Working Paper: Search for Yield in Large International Corporate Bonds: Investor Behavior and Firm Responses (2019)
Working Paper: Search for Yield in Large International Corporate Bonds: Investor Behavior and Firm Responses (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:165

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