Review of Finance Vol. 28 No. 4 2024

Complementarity of sovereign and corporate debt issuance: mind the gap

Bruce D. Grundy¹; Sjoerd van Bekkum²; Patrick Verwijmeren^2,3

¹ Research School of Finance, Statistics and Actuarial Science, Australian National University · ² Erasmus School of Economics, Erasmus University Rotterdam , · ³ Faculty of Business and Economics, University of Melbourne

Abstract

We investigate the relation between sovereign and corporate bond issuance. Sovereign bond issues that increase a country’s maximum maturity are followed by increases in the maximum maturity of corporate issues. Our results point to issuance complementarities based on the benchmarking of corporate bonds to sovereign bonds. Sovereign and corporate bond issues are also substitutes, but substitutability requires the availability of a high-quality sovereign bond benchmark. By adding to existing theories focusing on substitutability, our findings highlight the role that the maturity of sovereign debt plays in capital market development.

DOI

10.1093/rof/rfae006

Volume

28

Issue

4

Pages

1187-1213

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓