When Central Banks Buy Corporate Bonds: Target Selection and Impact of the European Corporate Sector Purchase Program
57 Pages Posted: 28 Dec 2017 Last revised: 6 May 2021
Date Written: April 24, 2021
We study the timing of the European Corporate Sector Purchase Program and its direct effect on corporate financing decisions. Consistent with the goal of reducing credit premia, more timely purchases are observed for eligible bonds characterized by higher credit risk. Firms effectively targeted increase their relative use of market debt and the maturity of newly issued bonds more than eligible but not (yet) targeted issuers. The estimated effect is not driven by the verified relation between selection and credit risk. The program has fostered the ability to tap credit markets directly especially for eligible corporations whose bonds are actually purchased.
Keywords: Corporate Sector Purchase Program, Corporate Bonds, Central Bank Asset Purchases, Quantitative Easing, Corporate Debt
JEL Classification: G18, G28, G32
Suggested Citation: Suggested Citation