Cry wolf and it appears: Debt ceiling debates and new corporate bond issues

Tunde Kovacs and Yadi Wang

Finance Research Letters, 2024, vol. 65, issue C

Abstract: We provide evidence that attention to debt ceiling debates affects the pricing of new corporate bond issues. Measuring public attention by using data from the Google Search Volume Index with the keyword “debt ceiling,” we find an increase in bond yields for non-investment grade short maturity issues at times of high attention. Further analysis suggests that the results are likely not due to changes in uncertainty or risk aversion, rather, to attention spillover to lower quality firm's short-term financing needs.

Keywords: Debt ceiling debate; Bond issues; Abnormal yield spread; Attention spillover (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005610

DOI: 10.1016/j.frl.2024.105531

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