Does geopolitical risk raise or lower corporate credit spreads?

He Huang and Yancheng Qiu

Economics Letters, 2025, vol. 247, issue C

Abstract: Using transaction-level U.S. corporate bond data, we document a significant negative relationship between geopolitical risk changes and credit spreads, driven by a disproportionate rise in cash-flow-matched Treasury yields. This finding cannot be explained by macroeconomic factors or uncertainty channels.

Keywords: Credit spreads; Treasury yields; Geopolitical risk (search for similar items in EconPapers)
JEL-codes: E44 F51 G12 H56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176525000382

DOI: 10.1016/j.econlet.2025.112201

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