Global Corporate Bond Issuance: What Role for US Quantitative Easing?

37 Pages Posted: 12 Oct 2013 Last revised: 8 Mar 2014

See all articles by Marco Lo Duca

Marco Lo Duca

European Central Bank (ECB)

Giulio Nicoletti

European Central Bank

Ariadna Martinez

European Central Bank (ECB)

Multiple version iconThere are 2 versions of this paper

Date Written: February 28, 2014

Abstract

The paper investigates the impact of US quantitative easing (QE) on global non-financial corporate bond issuance. It distinguishes between two QE instruments, MBS/GSE debt and Treasury bonds, and disentangles between two channels of transmission of QE to global bond markets, namely flow effects (purchases) and stock effects (holdings). We control for a number of domestic and global macro-financial factors. In particular, we control for weaknesses in cross-border and domestic banking which might have induced the corporate sector to issue more bonds. The results indicate that US QE had a large impact on corporate bond issuance, especially in emerging markets, and that flow effects (i.e. portfolio rebalancing) were the main transmission channel of QE. A counterfactual analysis shows that bond issuance in emerging markets since 2009 would have been halved without QE.

Keywords: monetary policy, quantitative easing, spill-overs, bond issuance, Federal Reserve, United States, crisis management, emerging markets

JEL Classification: E52, E58, F42, G15

Suggested Citation

Lo Duca, Marco and Nicoletti, Giulio and Martinez, Ariadna, Global Corporate Bond Issuance: What Role for US Quantitative Easing? (February 28, 2014). Available at SSRN: https://ssrn.com/abstract=2339253 or http://dx.doi.org/10.2139/ssrn.2339253

Marco Lo Duca (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Giulio Nicoletti

European Central Bank ( email )

Kaiserstrasse 29
Frankfurt am Main, Hessen 60311
Germany

Ariadna Martinez

European Central Bank (ECB)

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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