Abstract
The issuance of putable bonds is negatively correlated with the slope of the yield curve. The authors find strong negative correlations since 1986 between the putable bond share of new issue volume and various spreads on the yield curve. They also present ad hoc evidence that supports their statistical results. For example, when the yield curve steepened dramatically in 1993, only one putable bond issue came to market. Conversely, putable bonds accounted for a double-digit share of corporate bond issues in 1989, when the yield curve was flat or slightly inverted.
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