 Large international corporate bonds: Investor behavior and firm responsesCharles W. Calomiris, Mauricio Larrain, Sergio Schmukler and Tomas Williams Journal of International Economics, 2022, vol. 137, issue C Abstract: Emerging market corporations have significantly increased their borrowing in international debt markets since 2008. We provide a detailed dive into this borrowing by showing that it happened in one particular market segment. Firms significantly increased their large bond issuances, mostly above US$500 million, which became cheaper to issue. We find a strong clustering of issuances with a face value of exactly $500 million after 2008 compared to developed markets. This suggests increased willingness from investors, especially cross-over investors, to purchase emerging market bonds included in newly created bond indexes, which require a minimum face value of $500 million. However, not all firms could issue such large bonds. Firms large enough to do so faced a trade-off. Issuing index-eligible bonds allowed them to borrow at a lower cost at the expense of accumulating cash. Because of this “size yield discount,” many companies increased their issuances of index-eligible bonds, accumulating cash holdings. Keywords: Benchmark indexes; Bond issuance; Corporate financing; Emerging markets; Institutional investors (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:137:y:2022:i:c:s0022199622000563 DOI: 10.1016/j.jinteco.2022.103624 Access Statistics for this article Journal of International Economics is currently edited by Martin Uribe and Costas Arkolakis More articles in Journal of International Economics from Elsevier |
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