Raising Bond Capital in Segmented Markets

Siani, Kerry

doi:10.2139/ssrn.4239841

Cited by 5 publications

(4 citation statements)

References 74 publications

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“…These relationships are consistent with underwriter bargaining power, reflected in a positive spread of primary relative to secondary market yields (Cai et al, 2007;Siani, 2021b).…”

Section: Corporate Bond Marketsupporting

confidence: 71%

“…The larger insurers' impact on bond prices, the stronger is the incentive for firms to issue more bonds. The observation that prices are elevated (as documented in Section 5) despite the strong reaction in bond issuance is consistent with a high price elasticity of primary market investors (Siani, 2021b), which implies that large changes in supplied quantity associate with small changes in issuance yields. 39 In this case, the transmission of demand shocks from the secondary to the primary market amplifies the initial effect, enabling firms to issue large amounts at high prices.…”

Section: Baseline Resultssupporting

confidence: 53%

“…This condition is not trivial since insurers respond to an increase in insurance premiums by purchasing bonds almost entirely in the secondary market. Primary market participants may react to exploit arbitrage opportunities, selling bonds in the secondary market quickly after issuance (Siani, 2021b), or because they interpret changes in secondary market prices as news about firms' fundamentals.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

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Investor-Driven Corporate Finance: Evidence from Insurance Markets

Kubitza

2023

SSRN Journal

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“…These relationships are consistent with underwriter bargaining power, reflected in a positive spread of primary relative to secondary market yields (Cai et al, 2007;Siani, 2021b).…”

Section: Corporate Bond Marketsupporting

confidence: 71%

Section: Baseline Resultssupporting

confidence: 53%

Section: Conceptual Frameworkmentioning

confidence: 99%

See 1 more Smart Citation

Investor-Driven Corporate Finance: Evidence from Insurance Markets

Kubitza

2023

SSRN Journal

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“…It describes anything that might explain a deviation from the price that risk-neutral investors would set. For instance, if large trades tend to produce temporary price pressure for a given type of asset (Elkamhi and Nozawa, 2022;Coval and Stafford, 2007), this could also affect price dynamics around offerings of that type of asset (Ivashina and Sun, 2011;Corwin, 2003;Siani, 2022). In the context of our tests, we would describe such dynamics as a (time-varying) risk premium.…”

Section: Hypothesesmentioning

confidence: 99%

What Do Lead Banks Learn from Leveraged Loan Investors?

Bruche,

Meisenzahl,

2023

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In leveraged loan deals, lead banks use bookbuilding to extract pricerelevant information from syndicate participants. This paper examines the content of such information. We find that pricing adjustments during bookbuilding are highly informative, not only about investors' required risk premium but also about borrower quality. A one-percentage-point increase in loan spread predicts a 0.8% higher excess return, a proxy for risk premium, over the first 3 months of secondary market trading. More importantly, it also predicts a 3% higher probability of subsequent default, implying that investors have private information about borrower quality that is unknown to the lead bank. Our findings suggest a new view of how information asymmetries affect syndicated lending.

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Corporate Bond Market Reaction to the Mandatory ESG Disclosure Act: Is Sustainium Sustainable?*

Lee,

Choi,

Choi

et al. 2024

Asia-Pac J of Fin Stud

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We investigate the primary and secondary market reactions of US corporate bonds to the mandatory Environmental, Social, and Governance (ESG) Disclosure Act of 2021 (hereafter, the ESG Disclosure Act). We compare ESG bonds with non‐ESG bonds through a yield spread analysis for the primary market and a bond event study for the secondary market, assessing the impact on a sustainable premium (“sustainium”) following the enactment. Sustainium disappears from the primary market after the ESG Disclosure Act. Abnormal corporate bond returns in the secondary market are negative, and the impact on the sustainium is not economically different from zero. We also find that long‐term corporate bonds are more vulnerable to the ESG Disclosure Act. These findings indicate that investors should assess ESG bonds according to long‐term horizons if the sustainium is expected to persist.

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Raising Bond Capital in Segmented Markets

Cited by 5 publications

References 74 publications

Investor-Driven Corporate Finance: Evidence from Insurance Markets

Investor-Driven Corporate Finance: Evidence from Insurance Markets

What Do Lead Banks Learn from Leveraged Loan Investors?

Corporate Bond Market Reaction to the Mandatory ESG Disclosure Act: Is Sustainium Sustainable?*

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