Search for Yield in Large International Corporate Bonds: Investor Behavior and Firm Responses

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

The Benchmark Inclusion Subsidy

“…This number is in line withCalomiris, Larrain, Schmukler, and Williams (2019), who estimate the yield discount for emerging markets investment grade corporate issues eligible for index inclusion to be between 76 to 99 basis points in recent data.…”

Global Corporate Debt during Crises: Implications of Switching Borrowing Across Markets

“…We assume that financing K in international markets is also more expensive than financing it from local banks, especially once firms take into account the issuance cost and the larger issuance size required to raise capital in international markets, among other things (Gozzi et al, 2015;Calomiris et al, 2019). Hence, the cost of C to the firm is given by y * (C), which entails increasing marginal costs, (3)…”

Growth of Global Corporate Debt: Main Facts and Policy Challenges

“…In particular, there was substantial growth in the issuance of large denomination bonds. Investors tended to favor large, indexeligible bonds because they are more liquid and limit the risk of underperforming market benchmarks (Calomiris et al, 2019).…”