publication . Preprint . 2003

The At Issue Maturity of Corporate Bonds: The Influence of Credit Rating, Security Level, Duration and Macreoconomic Conditions

Geetajali Bali; Frank Skinner;
Open Access
  • Published: 01 Jan 2003
Abstract
We examine the determinants of the at issue time to maturity of corporate bonds. We find evidence that corporations partly determine the at issue maturity of bonds by responding to economic conditions. They also appear to immunize by matching the maturity of assets with the at issue maturity of bonds regardless of credit quality. Finally, we find evidence that the security level (our proxy for the recovery rate) is inversely related to the at issue time to maturity. This suggests that lenders use the promised maturity and security level bond covenants as screening mechanisms to overcome some of the asset substitution and adverse selection problems associated wit...
Subjects
Medical Subject Headings: health care economics and organizations
free text keywords: maturity, credit risk, security level, duration, macroeconomic factors, jel:G24
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