The Determinants of the Maturity of Corporate Debt Issues

95-11, The Charles A. Dice Center for Research in Financial Economics Working Papers Series

Posted: 22 Jul 1996

See all articles by José Correia Guedes

José Correia Guedes

Catholic University of Portugal (UCP) - Faculty of Economic Science and Business Studies

Tim C. Opler

Credit Suisse First Boston

Multiple version iconThere are 2 versions of this paper

Date Written: January 1996

Abstract

We document the determinants of the term to maturity of 7,369 bonds and notes issued between 1982 and 1993. Our main finding is that large firms with investment grade credit ratings typically borrow at the short end and at the long end of the maturity spectrum, while firms with speculative grade credit ratings typically borrow in the middle of the maturity spectrum. This pattern is consistent with the theory that risky firms do not issue short-term debt in order to avoid inefficient liquidation, but are screened out of the long-term debt market because of the prospect of risky asset substitution.

JEL Classification: G32

Suggested Citation

Correia Guedes, José Filipe and Opler, Tim C., The Determinants of the Maturity of Corporate Debt Issues (January 1996). 95-11, The Charles A. Dice Center for Research in Financial Economics Working Papers Series, Available at SSRN: https://ssrn.com/abstract=7603

José Filipe Correia Guedes

Catholic University of Portugal (UCP) - Faculty of Economic Science and Business Studies ( email )

Lisboa, 1600
Portugal

Tim C. Opler (Contact Author)

Credit Suisse First Boston ( email )

11 Madison Avenue
Investment Banking Div., 23rd Flr
New York, NY 10010
United States
(212) 328-5313 (Phone)
(212) 448-3410 (Fax)

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