The Market for Borrowing Corporate Bonds
This paper describes the market for borrowing corporate bonds using a comprehensive data set from a major lender. The cost of borrowing corporate bonds is comparable to the cost of borrowing stock, between 10 and 20 basis points, and both have fallen over time. Factors that influence borrowing costs...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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Elsevier B.V.
2012
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| Online Access: | http://hdl.handle.net/1721.1/73466 https://orcid.org/0000-0001-8621-3864 https://orcid.org/0000-0002-7883-246X |
| _version_ | 1826198040753471488 |
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| author | Asquith, Paul Au, Andreas S. Covert, Thomas Pathak, Parag |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Asquith, Paul Au, Andreas S. Covert, Thomas Pathak, Parag |
| author_sort | Asquith, Paul |
| collection | MIT |
| description | This paper describes the market for borrowing corporate bonds using a comprehensive data set from a major lender. The cost of borrowing corporate bonds is comparable to the cost of borrowing stock, between 10 and 20 basis points, and both have fallen over time. Factors that influence borrowing costs are loan size, percentage of inventory lent, rating, and borrower identity. There is no evidence that bond short sellers have private information. Bonds with Credit Default Swaps (CDS) contracts are more actively lent than those without. Finally, the 2007 Credit Crunch does not affect average borrowing costs or loan volume, but does increase borrowing cost variance. |
| first_indexed | 2024-09-23T10:57:55Z |
| format | Article |
| id | mit-1721.1/73466 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T10:57:55Z |
| publishDate | 2012 |
| publisher | Elsevier B.V. |
| record_format | dspace |
| spelling | mit-1721.1/734662022-09-27T16:13:10Z The Market for Borrowing Corporate Bonds Asquith, Paul Au, Andreas S. Covert, Thomas Pathak, Parag Massachusetts Institute of Technology. Department of Economics Sloan School of Management Pathak, Parag Asquith, Paul Pathak, Parag This paper describes the market for borrowing corporate bonds using a comprehensive data set from a major lender. The cost of borrowing corporate bonds is comparable to the cost of borrowing stock, between 10 and 20 basis points, and both have fallen over time. Factors that influence borrowing costs are loan size, percentage of inventory lent, rating, and borrower identity. There is no evidence that bond short sellers have private information. Bonds with Credit Default Swaps (CDS) contracts are more actively lent than those without. Finally, the 2007 Credit Crunch does not affect average borrowing costs or loan volume, but does increase borrowing cost variance. 2012-09-28T14:18:51Z 2012-09-28T14:18:51Z 2012-08 2011-10 Article http://purl.org/eprint/type/JournalArticle 0304-405X 1879-2774 http://hdl.handle.net/1721.1/73466 Asquith, Paul et al. "The market for borrowing corporate bonds." Journal of Financial Economics, Volume 107, Issue 1, January 2013, Pages 155-182. https://orcid.org/0000-0001-8621-3864 https://orcid.org/0000-0002-7883-246X en_US http://www.sciencedirect.com/science/article/pii/S0304405X12001614 Journal of Financial Economics Creative Commons Attribution-Noncommercial-Share Alike 3.0 http://creativecommons.org/licenses/by-nc-sa/3.0/ application/pdf Elsevier B.V. MIT web domain |
| spellingShingle | Asquith, Paul Au, Andreas S. Covert, Thomas Pathak, Parag The Market for Borrowing Corporate Bonds |
| title | The Market for Borrowing Corporate Bonds |
| title_full | The Market for Borrowing Corporate Bonds |
| title_fullStr | The Market for Borrowing Corporate Bonds |
| title_full_unstemmed | The Market for Borrowing Corporate Bonds |
| title_short | The Market for Borrowing Corporate Bonds |
| title_sort | market for borrowing corporate bonds |
| url | http://hdl.handle.net/1721.1/73466 https://orcid.org/0000-0001-8621-3864 https://orcid.org/0000-0002-7883-246X |
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