Corporate Pandemic Bonds
45 Pages Posted: 19 May 2020 Last revised: 20 Aug 2021
Date Written: July 23, 2021
I examine corporate pandemic bonds, whose proceeds are committed to COVID-19 containing activities. I find an average cumulative abnormal return of 1.33–1.71% during the five trading days surrounding their issuance announcement. Also, their yield spread is 13.8–20.9 basis points lower than that of otherwise similar non-pandemic bonds. Additional evidence suggests that their issuances could facilitate COVID-19 containment. In mainland China, newly confirmed COVID-19 cases decrease by 1,217, recovered cases increase by 6,468, and the recovery rate increases by 6.9% following the issuance of a corporate pandemic bond.
Keywords: Corporate Bonds, Stock Returns, Pandemic, COVID-19, Yield Spreads, Corona Virus
JEL Classification: E44, G10, G12, G13, G32, H84, I10
Suggested Citation: Suggested Citation