Key determinants of bond issue terms on the Catalyst bond market in 2009-2019

• Autorzy: Czesław Bartłomiej Martysz , Agnieszka Kołyszko
• Języki publikacji: EN

Abstrakty

EN

Issuers of bonds listed on the Polish Catalyst bond trading platform are mainly large, mature, and profitable enterprises with quite a significant level of financial leverage. Accord - ing to our research, high financial leverage is the main reason for issuing corporate bonds instead of using bank loans. Furthermore, public bond issuers show a noticeable degree of concentration around the dominant sectors with a particular emphasis on the real estate development and energy-fuel industries. The profile of needs, which they try to finance by issuing debt securities, is clearly heterogeneous - these are mainly investments in assets and development, debt refinancing, and general needs of the company. The research shows that the size of the issuer may constitute a significant barrier to entering the Polish debt market and raising capital through bond issue. We found a positive correlation between the size of the company and the likelihood of its decision to issue bonds. Moreover, for most companies in Poland, bank credit is a form of first choice financing, therefore, the decision to issue bonds is often made at the very end - in situations of additional capital needs. This should be considered as contradictory to what one would expect according to the theory of capital structure. This is largely due to the status quo maintained by the overcapitalised banks. The bond market has not been able to create a competitive offer for creditworthy issuers for many years. The most important determinants of the non-treasury bond interest rates in Poland are financial leverage and the size of the issuer. A fundamental threat to investors is the insolvency of an issuer, therefore, the higher the debt in the balance sheet of a given issuer, the more it is perceived by potential bondholders as risky, which implies higher bond interest rates. As far as large (in terms of their balance sheets) and reputable companies are concerned, they are generally considered to be more secure, which makes it easier for them place bonds at a competitive interest rate levels. Thus, regarding the bonds terms and conditions of issue, our research showed that callable, non-collateralised bonds issued privately and in large series had statistically lower interest rates. Finally, it is worth mentioning that a potential ally of disintermediation of corporate financing may turn out to be the current policy of low interest rates, leading to a decrease in profitability of long-term treasury instruments and thus mobilising investors, who are seeking for higher returns, to enter the more risky Polish corporate bond market. Nevertheless, as our research was limited only to bonds listed in organised trading markets and did not include the unlisted bond market, this limitation, as well as our methodology, may be the motivation for future researchers to survey other fixed-income markets.(original abstract)

Słowa kluczowe

PL

Obligacje korporacyjne; Rynek Catalyst; Emisja obligacji

EN

Corporate bonds; Catalyst market; Bonds issuing

• Czasopismo: Journal of Management and Financial Sciences
• Rocznik: 2021
• Tom: 14
• Numer: nr 44
• Strony: 25-39

Twórcy

autor

Czesław Bartłomiej Martysz

• Collegium of Management and Finance SGH Warsaw School of Economics

autor

Agnieszka Kołyszko

• SGH Warsaw School of Economics

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