Issuance and Valuation of Corporate Bonds with Quantitative Easing

Using data on newly issued corporate bonds and syndicated loans, we investigate the effects of the Federal Reserve's interventions during the pandemic on corporate debt activity. We document heterogeneous effects for participation rates across firm credit ratings and debt maturity, consistent with a default risk channel of policy transmission. Investment‐grade firms disproportionately participate in debt markets following the Fed's announcements, which is driven by the riskiest firms (A and BBB ratings). We also find that BBB and BB‐rated firms drive increased participation in short‐term debt markets. These results provide evidence that the Fed's interventions improved credit market access to investment‐grade firms and the highest‐rated noninvestment‐grade firms.

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The Transmission Channels of Quantitative Easing: Evidence from the Cross-Section of Bond Prices and Issuance

Pegoraro

Montagna

2017

SSRN Journal

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Issuance and Valuation of Corporate Bonds with Quantitative Easing

Abstract: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB.

Cited by 6 publications

References 122 publications

Unconventional green

Unconventional green

Debt financing, the pandemic, and Federal Reserve interventions

The Transmission Channels of Quantitative Easing: Evidence from the Cross-Section of Bond Prices and Issuance

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