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Interest rate risk management with debt issues: Evidence from Europe

Frédéric Délèze and Timo Korkeamäki

Journal of Financial Stability, 2018, vol. 36, issue C, 1-11

Abstract: In comparison to bank financing, public debt market may allow firms to more readily match maturity and risk structures between their assets and liabilities. We test whether new issuers on the European corporate bond markets experience a change in their interest rate sensitivity upon their bond issuance. We find that stock returns have become significantly less sensitive to interest rate fluctuations for firms that enter the publicly traded bond market. Our findings support the notion that firms manage their interest rate risk with new debt issues.

Keywords: Interest rate risk; Euro; Risk management (search for similar items in EconPapers)
JEL-codes: F36 G15 G32 (search for similar items in EconPapers)
Date: 2018
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