The cost of firms' debt financing

Daniele Pianeselli and Andrea Zaghini

No 2013/03, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: 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.

Keywords: Corporate bonds; Risk-premium; Too big to fail; Sovereign debt crisis (search for similar items in EconPapers)
JEL-codes: G32 G38 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-fmk
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:201303

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