The Market for Borrowing Corporate Bonds

By P. Asquith, Andrea S. Au, Thomas R. Covert, Parag A. Pathak. 2010

123 citations recorded by the source corpus.

This paper describes the market for borrowing corporate bonds using a comprehensive data set from a major lender. The cost of borrowing corporate bonds is comparable to the cost of borrowing stock, between 10 and 20 basis points, and both have fallen over time. Factors that influence borrowing costs are loan size, percentage of inventory lent, rating, and borrower identity. There is no evidence that bond short sellers have private information. Bonds with Credit Default Swaps (CDS) contracts are more actively lent than those without. Finally, the 2007 Credit Crunch does not affect average borrowing costs or loan volume, but does increase borrowing cost variance.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/f92f8f67b80087ebab35d21fc4b069ce85247216

Citations in the corpus

• Value investing in credit markets (2012, unknown): “Asquith et al. (2010) note that the lending fee on loans of corporate bonds greater than $100,000 is about 16 basis points for the 2004–2007 period.”