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Global Dollar Credit and Carry Trades: A Firm-Level Analysis

Valentina Bruno and Hyun Song Shin

Review of Financial Studies, 2017, vol. 30, issue 3, 703-749

Abstract: We conduct a firm-level analysis of borrowing in US dollars by nonfinancial corporates from outside the United States. We find that emerging market firms with already high cash holdings are more likely to issue US dollar-denominated bonds, especially during periods when the dollar carry trade is more favorable. The proceeds of the dollar bond issuance add to the firm’s cash holdings more than other sources of funds. The evidence points to financial decisions that resemble carry trades, rather than to precautionary borrowing in anticipation of future financing needs.Received November 30, 2015; editorial decision July 20, 2016 by Editor Itay Goldstein

JEL-codes: F32 G15 G30 (search for similar items in EconPapers)
Date: 2017
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Review of Financial Studies is currently edited by Itay Goldstein

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