Bond Loans Research Articles

Financial and Legal Prospects for the Use of Government Bond Loans in Modern Conditions

The purpose of the study is to identify positive aspects of expanding the use of government bond loans. The paper also focuses on theoretical concepts of the ratio of taxes and loans, analyzing the advantages and disadvantages of government bond loans to determine their impact on the decisions of the issuer and the investor. Consideration of foreign experience in the use of bond loans allows identifying common features and aspects to improve the legal regulation of this institution in Russia science and practice.
 The results of the research consist of summarizing the studied material and describing the prospects for the development and use of government loans as a tool of financial and legal policy. The experience of foreign countries proves that it is possible to determine the legal nature of a government bond loan through the prism of regulating a new institution – the issue obligation.
 Conclusion: it is advisable to adopt a normative legal act that would systematize the form of government debt, contain general rules for the use of certain types of borrowing and mechanisms for servicing and repayment of debt, and provide other guarantees, principles of compensation, ways to restructure debt obligations, as well as a mechanism for interaction of public authorities in this area with clear regulation of the powers of public authorities and sanctions for late performance or non-performance by the issuer of its obligations.

Who Limits Arbitrage?

The cost of selling a security short is an equilibrium outcome of the demand for short positions and the willingness of long-term institutional investors to lend their securities to short sellers. We introduce an imperfectly competitive securities lending market into a model of securities traders with private information. Long-term institutional investors with greater liquidity risk tolerance are more willing to lend their securities, lowering the cost of taking short positions, which increases price informativeness in the spot trading market. We find empirical support for these predictions in the universe of corporate bond trades and life insurers' corporate bond loans.

Fiscal decentralization: the search for new approaches for the development of local government

In this article, the authors consider issues of fiscal decentralization in the context of sustainable development of territories, justify the development trends of the world community in providing public goods for the population. The analysis of this issues is carried out in comparison of indicators for Russia and the countries of the Organization for Economic Cooperation and Development (OECD). This allows assessing the current level of fiscal decentralization in the world community, in Russia, and also determining its prospects. The authors presented the results of the study, which contain the dynamics of subnational budgets of Russia and OECD countries, separately identified local budgets, the dynamics of financing of proactive budgeting, the typology of the main projects of proactive budgeting, examples of municipal-private partnership projects implemented in Russia. In addition, the article sets out new approaches to the financial support of local government activities in the country, based on the introduction of self-taxation, bond loans and other forms of financing at the municipal level.

ОСОБЛИВОСТІ БОРГОВОГО ФІНАНСУВАННЯ ЕКОНОМІКИ УКРАЇНИ

The article examines the impact of capital attracted through domestic state bond on a recipient economy. It investigates the features of global borrowing, major reasons for debt growth and proves the importance of internal borrowing on the example of Ukraine. Further, the article overlooks the structure of debt capital and changes in the main groups of bond loans over the last years. It explains the reasons for changing dynamics of debt capital engaged by Ukraine through external and domestic borrowing. The research substantiates functional purpose of state bonds and their crucial role in balancing budget deficit andpost-crisis recovery of the national economy. With regard to the global cut of the interest rates, the perspective directions of further research of debt capital can be a feasibility of its cost, volatility of investors’ demand and reliability of debt attraction due to the country risk of a borrower. The growth of public debt in developing countries requires clarifying the structure of debt capital and clarifying the directions for using public debt. In a view of the above analysis, it is appropriate to conclude that the functional appropriation of OVDP funds is only in financing the budget deficit and the trade balance. Strategically important areas of debt capital use in Ukraine include restoring the liquidity of the banking sector, maintaining the functioning of key government institutions, ensuring Ukraine's defense capability and the creditworthiness of the national economy.

RESEARCH OF THE MARKET STRUCTURE OF RUSSIAN CORPORATE BONDS (EXAMPLE OF THE FUEL AND ENERGY COMPLEX AND HEAVY INDUSTRY)

An important direction for the stabilization of economic development is the existence of effective mechanisms for attracting financial resources by business entities. Due to its investment capacity, Russia’s corporate securities market plays an important role in the financial system of the state. The need for economic recovery (after crisis, military-political, sanction and other force majeure circumstances) also requires the widespread use of corporate securities as equity capital raising instruments. The formation of the corporate securities market enables the financing of the needs of economic entities in the three institutional sectors – financial, non-financial corporations and households. In spite of the importance of access to financial resources of contractors of all institutional sectors, financing of the sector of non-financial corporations (enterprises-subjects of the real sector of economy) in today’s conditions determines the rates and proportions of economic development. Enterprises – market participants decide the issue of attracting the necessary resources through the issue of various equity and debt corporate securities. This determines their investment position in capital markets and, at the same time, reveals the ability to use the investment potential of the corporate securities market.In this regard, the article deals with the peculiarities of the formation of the market for Russian corporate bonds. Various indexes of corporate bonds of the Moscow Stock Exchange are considered. A detailed analysis of the placement of corporate bond loans in the sectors of the fuel and energy industry and heavy industry has been conducted. The main dominant industries, attractive for investors in recent years, as well as branches in which the investment decline is observed, are revealed.The conducted researches can serve as the basis for the development of practical recommendations for improving the efficiency of the functioning of the corporate securities market.

Corporate Borrowings: Strengthening of the Role of a Bank Loan

In 2018, bank lending to corporate customers is gradually gaining momentum mainly by means of rouble loans to non-financial institutions. Domestic bond market dynamics slowed down dramatically due to reduction of new borrowings by the Rosneft oil company. In 2018, the share of bond loans on the domestic market is diminishing.

Bond Lending and Bond Returns

Existing literature nds that proxies for short-sale constraints do not predict bond returns. Using more comprehensive data over a longer sample period and rating and maturity-matched benchmarks we nd that utilization, which proxies for short-sale constraints, predicts negative returns. Many lending fees are negative or low, suggesting many bond loans are fi nancing transactions. The bonds with both high lending fees and high utilization, for which lending is likely associated with short sales and constraints are likely to be binding, display large negative excess returns. These results are robust to controlling for bond characteristics and information from the equity lending market.

Правовое обеспечение государственных гарантий в инвестиционной сфере

The article deals with the provisions of the current legislation containing measures of state stimulation of investment activity for the purpose of industrial development and production of competitive products. Among the array of legislation, the author identifies the position of the industrial policy under which conditions are created for legal, economic and organizational stimulation of legal entities and individual entrepreneurs to establish or maintain (modernizing) industrial projects in the Russian Federation. The author points out that the legislation provides for financial assistance in terms of grants from the federal budget of the Russian Federation, the budgets of the Russian Federation, local budgets; the possibility of concluding a special investment contract; provision of information and consulting services; support scientific and technological activity and innovation activity of investors in the industry. The article details the procedure for granting state guarantees of the Russian Federation on loans or bond loans, attracted for implementation of investment projects related to the creation of new or renovation of existing social, agroindustrial, industrial, utility and transportation facilities, and the possibility of their further exploitation. The authors point to the desirability of introducing legislation on investment activities, the provisions on the criteria for the recognition of investment objects as socially important facilities in the Russian Federation.

Why do companies issue convertible bond loans? An empirical analysis for the Canadian market

AbstractTo identify issuer motives, we study the determinants of announcement effects of convertible debt issues in the Canadian market. Classified into equity‐ and debt‐like, wealth effects are significantly more negative for equity‐like convertible bond issuers. Equity‐like convertibles are significantly negatively affected by agency costs of equity. However, agency costs of debt have no significant effect on debt‐like convertibles. Consistent with Stein (1992), this suggests convertibles in particular represent a substitute for equity. Moreover, convertible debt offers announced by income trusts experience significantly less negative wealth effects than offers by nontrusts—a finding explained by a more debt‐like convertible design, very low agency costs of equity in case of income trusts, or both. Copyright © 2008 ASAC. Published by John Wiley & Sons, Ltd.

Why Do Companies Issue Convertible Bond Loans? An Empirical Analysis for the Canadian Market

We study the announcement effects and their determinants of convertible debt issues in the Canadian market in order to identify issuer motives. The average wealth effect for the three-day event window around the announcement of convertible bonds between 1991 and 2004 is a significantly negative -2.7%. When the issues are classified into equity- and debt-like, we find that the wealth effects are significantly more negative for the equity-like convertible bond issuers. Equity-like convertibles are significantly negatively affected by agency costs of equity. However, agency costs of debt do not have a significant effect on equity-like convertibles and agency costs of equity do not have a significant effect on debt-like convertibles. These findings suggest that convertibles are used to mitigate different aspects of informational asymmetries. These findings are in line with motives proposed by Stein (1992). Moreover, we find that convertible debt offers announced by income trusts, which have become a special feature of the Canadian market, experience significantly less negative wealth effects than similar offers announced by other issuers. This result can be explained by a more debt-like convertible design and/or very low agency costs of equity in case of income trusts.

Het Panama-schandaal (1889-1893). De staat, de straat en de boosdoeners

The bankruptcy of the Compagnie Universelle du Canal Interocéanique de Panama on the 4th of Februari 1889 was front-page news all over the civilised word. Some 80.000 shareholders were duped. The downfall of the enterpise that had failed to complete the canal across the Isthmus of Panama led to judicial inquiries and parliamentary investigations. An extensive criss-cross pattern of corruption was<br /> revealed. Leading journalists and politicians had been bribed by the company which was led by the aged Ferdinand the Lesseps - builder of the Suez Canal - and Gustave Eiffel - builder of the newly-opened Eiffel Tower - to present positive news about the progress of the project and to support laws that made it<br /> possible for the Compagnie Universelle to issue bond loans in combination with a lottery. The scandal gave birth to a vehement anti-Semitic campaign in 1892 which was aimed at two bankers who had acted as mediators: Baron de Reinach and Julius Herz. Hence the Panama scandal is often seen as a preliminary to the Dreyfus affair. In the article the scandal is seen in the light of anti-Semistism as a phenomena that is not specific to right-wing politicians and in the light of a political culture in which politics journalism and public opinion have a colour that is peculiar to the period under consideration.

Band-aid or Panacea? The Role of Private Rental Support Programs in Addressing Access Problems in the Australian Housing Market

Australia has a significant private rental market with over a quarter of households renting their home from a private landlord. Many of these households are on low incomes and receive assistance from private rental support programs provided by each Australian state and territory. In spite of these large numbers, little is known about the effectiveness of policy initiatives to assist low-income private renters. Limited knowledge of the private rental support programs stands in stark contrast to the detailed research on programs established to address homelessness and problems within the public housing sector. This paper addresses this lacuna by reporting on the suite of initiatives currently funded by state governments to assist low-income households (for example, bond loans and rental deposits, advice and help with removal expenses). Based on a comprehensive study of Private Rental Support Programs (PRSPs) commissioned by the Australian Housing and Urban Research Institute, it is argued that though policies to assist vulnerable tenants are acknowledged as a success by practitioners and clients, their effectiveness as a policy instrument is undermined by wider structural changes in the housing market. The paper concludes that the stress faced by many vulnerable households is likely to intensify over the coming years thereby compounding the pressure on state Housing Authorities to provide more comprehensive packages of support that extend beyond just a ‘one-off’ form of assistance.

Corporate Bond Specialness

Using data on all corporate bond loans by one of the world’s largest custodian banks, we study the main determinants of shorting costs as measured by rebate rate specialness. We find that 3.0% of corporate bonds are on loan, and 11% of loaned bonds have substantial shorting costs above 50 basis points. In the cross section, specialness is higher for bonds that are of worse credit rating, higher yield spread, smaller issues, less time to maturity, more illiquid, and bonds that appear expensive relative to the corresponding credit default swap. Bonds that are downgraded to speculative grade are more likely to be on special for several weeks before and after the downgrade, and have large shorting activity. Finally, equity specialness is positively related to the firm’s bond specialness and the bond-CDS basis.

Announcement effects of convertible bond loans and warrant-bond loans: An empirical analysis for the Dutch market

This study investigates the announcement effects of offerings of convertible bond loans and warrant-bond loans using data for the Dutch market. The event study analysis shows that announcement effects of convertible bonds are associated with positive but insignificant abnormal returns and that announcements of warrant-bonds are associated with significant positive abnormal returns. These findings are similar to the results for Japanese hybrid debt, as reported by Kang et al. (1995) (Kang, J.K., Kim, Y.C., Park, K.J., Stulz, R.M., 1995. Journal of Financial and Quantitative Analysis, pp. 257–270) and Kang and Stulz (1996) (Kang, J.K., Stulz, R.M., 1996. Review of Financial Studies, pp. 109–139), but they contrast with studies for the United States that generally find significant negative abnormal returns for convertible bond loans and insignificant negative abnormal returns for warrant-bond loans. Our results cannot be attributed to differences in the corporate governance structures of the Netherlands and the United States. We find that the positive abnormal returns for the warrant-bond loans are caused by the packaging of the announcements with other (good) firm-specific news.

From the gulf of Bothnia to the White Sea

Abstract Up to the 1910s Sweden imported capital largely because she was placing bond loans abroad. The Swedish foreign debt in 1908 was 1,3 milliard kronor, 73 per cent of which was bond loans. The resulting inflow of capital was used for portfolio investments. Most of the capital came from France and was largely used for extending the Swedish railway network. Only 6 per cent of the foreign debt in 1908 consisted of shares. These were worth 78 million kronor. About one fourth of this seems to have gone to the wood industry.