Artikel
Foreign-Law Bonds: Can They Reduce Sovereign Borrowing Costs?
Governments often issue bonds in foreign jurisdictions, which can provide additional legal protection vis-á-vis domestic bonds. This paper studies the effect of this jurisdiction choice on bond prices. We test whether foreign-law bonds trade at a premium compared to domestic-law bonds. We use the euro area 2006-2013 as a unique testing ground, controlling for currency risk, liquidity risk, and term structure. Foreign-law bonds indeed carry significantly lower yields in distress periods, and this effect rises as the risk of a sovereign default increases. These results indicate that, in times of crisis, governments can borrow at lower rates under foreign law.
- Sprache
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Englisch
- Erschienen in
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Journal: Journal of International Economics ; ISSN: 0022-1996 ; Volume: 114 ; Year: 2018 ; Pages: 164-179 ; Amsterdam: Elsevier
- Klassifikation
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Wirtschaft
International Lending and Debt Problems
Asset Pricing; Trading Volume; Bond Interest Rates
Business and Securities Law
- Thema
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sovereign debt
creditor rights
seniority
law and finance
- Ereignis
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Geistige Schöpfung
- (wer)
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Chamon, Marcos
Schumacher, Julian
Trebesch, Christoph
- Ereignis
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Veröffentlichung
- (wer)
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Elsevier
ZBW - Leibniz Information Centre for Economics
- (wo)
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Amsterdam
- (wann)
-
2018
- DOI
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doi:10.1016/j.jinteco.2018.06.004
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Artikel
Beteiligte
- Chamon, Marcos
- Schumacher, Julian
- Trebesch, Christoph
- Elsevier
- ZBW - Leibniz Information Centre for Economics
Entstanden
- 2018
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