G2TT
来源类型Discussion paper
规范类型论文
来源IDDP16239
DP16239 Credit Risk and the Life Cycle of Callable Bonds: Implications for Corporate Financing and Investing
Bo Becker; Murillo Campello; Dong Yan; Viktor Thell
发表日期2021-06-09
出版年2021
语种英语
摘要Call provisions allow bond issuers to redeem their bonds early. While commonly observed, existing research offers limited insight into the purpose of this contract feature. We show that bond callability is designed to mitigate agency problems, with call features and execution being determined by credit spreads and issuer quality. Callable bonds have significantly higher yields and lower secondary market prices than non-callable bonds ("cost of callability"). Issuers call bonds when their credit quality improves. We provide novel evidence that callability reduces debt overhang affecting decisions ranging from capital investment to takeovers. Our results help explain the prevalence of call features and suggest that callability improves economic efficiency.
主题Financial Economics
关键词Callable bonds Credit risk Debt overhang Investment decisions
URLhttps://cepr.org/publications/dp16239
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/545207
推荐引用方式
GB/T 7714
Bo Becker,Murillo Campello,Dong Yan,et al. DP16239 Credit Risk and the Life Cycle of Callable Bonds: Implications for Corporate Financing and Investing. 2021.
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