CORPORATE AND SOVEREIGN FINANCING IN THE EUROBOND MARKET: SOME KEY ISSUES
DOI:
https://doi.org/10.7251/ZREFIS2021053PKeywords:
sovereign financing, corporate financing, the Eurobond marketAbstract
In this article the author considers the previous importance of the Eurobond market for corporate and sovereign financing, corporate and sovereign Eurobonds issuing process, as well as costs and effects of corporate and sovereign financing in the Eurobond market. These four issues associated with corporate and sovereign financing in the Eurobond market are studied through exposing the relevant theoretical knowledge and results of empirical research. According to author’s findings, in developed countries the Eurobond market is more important for corporate than for sovereign financing. On the contrary, in developing countries the Eurobond market is more important for sovereign than for corporate financing. Most theoretical attitudes associated with the influence of different factors are grouped in three categories: issue characteristics, market factors and macroeconomic factors, as well as the influence of contagion on the cost of sovereign and corporate financing in the Eurobond market were empirically confirmed. Benefits of corporate and sovereign financing in the Eurobond market are certainly large and risks can successfully be managed.References
Amira, Khaled. 2004. “Determinants of Sovereign Eurobonds Yield Spread.” Journal of Business Finance & Accounting 31 (5-6): 795-821. doi: https://doi.org/10.1111/j.0306-686X.2004.00557.x.
Batten, Jonathan, Ellis, Craig, and Hogan, Warren. 2002. “Scaling the Volatility of Credit Spreads: Evidence from Australian Dollar Eurobonds.” International Review of Financial Analysis 11(3): 331-344. doi: https://doi.org/10.1016/S1057-5219(02)00079-0.
Batten, Jonathan, and Hogan, Warren. 2003. “Time Variationn in the Credit Spreads on Australian Eurobonds.” Pacific-Basin Finance Journal 11 (1): 81-99. doi: https://doi.org/10.1016/S0927-538X(02)00097-5.
Batten, Jonathan, Hogan, Warren, and In, Francis. 2002. “Valuing Credit Spreads on Quality Australian Dollar Eurobonds in a Multivariate EGARCH Framework.” Australian Economic Papers 41(1): 115-128. doi: https://doi.org/10.1111/1467-8454.00153.
Batten, Jonathan, Hogan, Warren, and Jacoby, Gady. 2005. “Measuring Credit Spreads: Evidence from Australian Eurobonds.” Applied Financial Economics 15(9): 651-666. doi: https://doi.org/10.1080/09603100500056809.
Bunescu, Liliana. 2016. “Current Market of Government Bonds in Romania.” Revista Economica 68(3): 8-23. URL: http://economice.ulbsibiu.ro/revista.economica/archive/68301bunescu.pdf.
Claes, Anouk, De Ceuster, J. K. Mark, and Polfliet, Ruud. 2002. “Anatomy of the Eurobond Market 1980–2000.” European Financial Management 8 (3): 373-385. doi: https://doi.org/10.1111/1468-036X.00194 .
do Rosário Correia, Maria. 2008. “The Choice of Maturity and Additional Covenants in Debt Contracts: A Panel Data Approach.” Research in International Business and Finance 22(3): 284-300. doi: https://doi.org/10.1016/j.ribaf.2007.09.001.
do Rosário Correia, Maria, Linn, C. Scott, and Marshall, Andrew. 2004. “An Empirical Investigation of Debt Contract Design: The Determinants of the Choice of Debt Terms in Eurobond Issues.” FEP Working Papers 148, Universidade do Porto, Faculdade de Economia do Porto, URL: http://wps.fep.up.pt/wps/wp148.pdf
Fuertes, Alberto, and Serena, Jose Maria. 2018. “How Firms Borrow in International Bond Markets: Securities Regulation and Market Segmentation.” Journal of Financial Regulation and Compliance 26(1): 135-169. doi: https://doi.org/10.1108/JFRC-11-2016-0100.
Gabbi, Giampaolo, and Sironi, Andrea. 2002. “Which Factors Affect Corporate Bond Pricing? Evidence from Eurobonds Primary Market Spreads.” SSRN Electronic Journal, doi: https://doi.org/10.2139/ssrn.308299.
Gereben, Áron, and Mák, István. 2010. “Potentials and Limitations of Non-governmental Forintdenominated Bond Issues by Non-residents.” MNB Bulletin (discontinued) 5(3): 29-39. URL: https://www.mnb.hu/letoltes/gereben-mak-en.pdf.
Gevorkyan, V. Aleksandr, and Kvangraven, Ingrid Harvold. 2016. “Assessing Recent Determinants of Borrowing Costs in Sub-Saharan Africa.” Review of Development Economics 20(4): 721–738. doi: https://doi.org/10.1111/rode.12195.
Halwampa, Albert, and Nalishebo, Shebo. 2015. “Eurobonds Repayment: Limiting the Risk of Default.” ZIPAR Policy Brief No. 17, Zambia Institute for Policy Analysis & Research, URI: http://saipar.org:8080/eprc/handle/123456789/557.
Kollo, G. Michael. 2005. Underwriter Competition and Gross Spreads in the Eurobond Market.” ECB Working Paper No. 550, European Central Bank. https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp550.pdf?bb17a664d659ce5a920987fc60d8f938.
Masetti, Oliver. 2015. “African Eurobonds: Will the Boom Continue?” Lanzeni, M. L. (Ed.). Research Briefing emerging markets, Deutsche Bank Research, Frankfurt, Germany. URL: https://docplayer.net/26894962-African-eurobonds-will-the-boom-continue.html.
Melnik, Arie, and Nissim, Doron. 2003. “Debt Issue Costs and Issue Characteristics in the Eurobond Market.” ICER Working Papers No. 09-2003, ICER-International Centre for Economic Research. URL: http://www.bemservizi.unito.it/repec/icr/wp2003/Melnik9-03.pdf .
Melnik, Arie, and Nissim, Doron. 2004. “Liquidity and Issue Costs in the Eurobond Market: The Effects of Market Integration.” In: Money Macro and Finance (MMF) Research Group Conference. Money Macro and Finance Research Group. URL: http://repec.org/mmfc04/48.pdf.
Melnik, Arie, and Nissim, Doron. 2006. “Issue Costs in the Eurobond Market: The Effects of Market Integration.” Journal of Banking & Finance 30(1): 157-177. doi: https://doi.org/10.1016/j.jbankfin.2005.01.005 .
Murphy, Austin. 2003. “An Empirical Analysis of the Structure of Credit Risk Premiums in the Eurobond Market.” Journal of International Money and Finance 22(6): 865-885. doi: 10.1016/S0261-5606(03)00050-0.
O'Malley, Chris. 2014. Bonds Without Borders: A History of the Eurobond Market. John Wiley & Sons. ISBN: 9781118843888.
Pilbeam, Keith. 2006. International Finance. USA: Palgrave Macmilan.
Presbitero, F. Andrea, Ghura, Dhaneshwar, Adedeji, S. Olumuyiwa, and Njie, Lamin. 2015. “International Sovereign Bonds by Emerging Markets and Developing Economies: Drivers of Issuance and Spreads.” IMF Working Paper No. 15/275, International Monetary Fund, URL: https://www.imf.org/en/Publications/WP/Issues/2016/12/31/International-Sovereign-Bonds-by-Emerging-Markets-and-Developing-Economies-Drivers-of-43493.
Presbitero, F. Andrea, Ghura, Dhaneshwar, Adedeji, S. Olumuyiwa, and Njie, Lamin. 2016. “Sovereign Bonds in Developing Countries: Drivers of Issuance and Spreads.” Review of Development Finance 6(1): 1-15. doi: https://doi.org/10.1016/j.rdf.2016.05.002.
Senga, Christian, and Cassimon, Danny. 2018. “Spillovers in Sub-Saharan Africa’s Sovereign Eurobond Yields.” ACROPOLIS-BeFinD Working Paper, 24, Belgian Policy Research Group on Financing for Development, URL: http://www.befind.be/Documents/WPs/wp24.
Senga, Christian, Cassimon, Danny, and Essers, Dennis. 2018. “Sub-Saharan African Eurobond Yields: What Really Matters Beyond Global Factors?” Review of Development Finance 8(1): 49-62. doi: https://doi.org/10.1016/j.rdf.2018.05.005.
Thuraisamy, S. Kannan, Gannon, L. Gerard, and Batten, A. Jonathan. 2010. “The Dynamics of Credit Spreads on Latin American Eurobonds.” SSRN Electronic Journal, doi: https://doi.org/10.2139/ssrn.1107104.
Zulu, Sarah. 2017. “Effects of Eurobonds and External Debt on Economic Growth in Zambia.” The International Journal of Multi-Disciplinary Research, ISSN: 3471-7102 Paper-ID: CFP/468/2017.
Downloads
Published
Issue
Section
License
Copyright (c) 2020 Zbornik radova Ekonomskog fakulteta u Istočnom Sarajevu
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
