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Kicking Maturity Down the Road: Early Refinancing and Maturity Management in the Corporate Bond Market.
- Source :
- Review of Financial Studies; Aug2018, Vol. 31 Issue 8, p3061-3097, 37p
- Publication Year :
- 2018
-
Abstract
- This paper examines debt maturity management through early refinancing, where firms retire their outstanding bonds before the due date and simultaneously issue new ones as replacements. Speculative-grade firms frequently refinance their corporate bonds early to extend maturity, particularly under accommodating credit supply conditions, leading to a procyclical maturity structure. In contrast, investment-grade firms do not manage their maturity in the same manner. I exploit the protection period of callable bonds to show that the maturity extension is not driven by unobservable confounding factors. The evidence is consistent with speculative-grade firms dynamically managing maturity to mitigate refinancing risk. Received June 6, 2016; editorial decision September 21, 2017 by Editor Philip Strahan. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 08939454
- Volume :
- 31
- Issue :
- 8
- Database :
- Complementary Index
- Journal :
- Review of Financial Studies
- Publication Type :
- Academic Journal
- Accession number :
- 130827156
- Full Text :
- https://doi.org/10.1093/rfs/hhx116