The cost of firms' debt financing

Arbeitspapier

We provide an assessment of the determinants of the risk premia paid by non-financial corporations on long-term bonds. By looking at 5,500 issues over the period 2005-2012, we find that in recent years the sovereign debt market turbulence has been a major driver of corporate risk. Compared with the three-year period 2005-07 before the global financial crisis, in the years 2010-12 Italian, Spanish and Portuguese firms paid on average between 70 and 120 basis points of additional premium due to the negative spillovers from the sovereign debt crisis, while German firms got a discount of 40 basis points.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFS Working Paper ; No. 2013/03

Classification and Topics

• Classification: Wirtschaft ; Corporate Finance and Governance: Government Policy and Regulation ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Corporate bonds ; Risk-premium ; Too big to fail, Sovereign debt crisis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pianeselli, Daniele ; Zaghini, Andrea
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (where): Frankfurt a. M.
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/83955
• URN: urn:nbn:de:hebis:30:3-324807
• Last update: 10.03.2025, 11:46 AM CET