Timing Performance and the Flotation of Shelf-Registered Bonds

Abstract

N The purpose of this paper is to measure the ability of firms (or their advisors) to time the issuance of shelfregistered bonds to occur at low points in the interest rate cycle. A timing performance measure is developed that compares the yield obtained by the issuing firm with the yield that would have been obtained using a strategy of selecting an issue date at random. A sample of completed shelf registrations from March 1982 to June 1985 is used to determine whether the timing of these bonds is significantly better than what would have been obtained by the naive benchmark strategy. To justify a study of this kind one needs to consider whether there are any reasons to believe that corporate treasurers, or the investment bankers that advise them, could or would want to time new bond issues. After all, it is a simple matter to think of many reasons why This research has been supported by grants from the University of Wisconsin-Whitewater Foundation and Marquette University.