Catering with Multiple Maturities

49 Pages Posted: 16 Mar 2010 Last revised: 26 Oct 2015

See all articles by Nishant Dass

Nishant Dass

Georgia Institute of Technology - Scheller College of Business

Massimo Massa

INSEAD - Finance

Date Written: July 13, 2010


We study how firms choose their debt maturity structure. We argue that because of lower information-gathering costs, institutional investors prefer to invest in firms with bonds outstanding across multiple maturities. We show that, in segmented markets, this preference for firms with bonds of multiple maturities generates excess demand by institutional investors for these bonds. This greater demand is especially due to larger institutions, and mostly insurance companies. This results in lower bond yields, both in the primary as well as the secondary bond markets. Aware of these benefits, firms respond by issuing bonds across the spectrum of maturities. However, geographical segmentation of financial markets constrains the ability of the firms to exploit such a strategy.

Keywords: Bonds, Catering, Debt Maturity Structure, Bond Yields and Spreads, Financial Institutions

JEL Classification: G12, G2, G32

Suggested Citation

Dass, Nishant and Massa, Massimo, Catering with Multiple Maturities (July 13, 2010). Available at SSRN: or

Nishant Dass (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
404-894-5109 (Phone)


Massimo Massa

INSEAD - Finance ( email )

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F-77305 Fontainebleau Cedex
+33 1 6072 4481 (Phone)
+33 1 6072 4045 (Fax)

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