Does the liquidity of a debt issue increase with its size? Evidence from the corporate bond and medium-term note markets

Article Abstract:

To investigate the liquidity of large issues, this study tests for yield differences between corporate bonds and medium-term notes (MTNs). In the sample, MTNs have an average issue size of $4 million, compared with $265 million for bonds. Among MTNs that have the same issuance date, the same maturity date, and the same corporate issuer, we find no relation between size and yields. Moreover, bonds and MTNs have statistically equivalent yields. Thus, rather than suggesting that large issues have greater liquidity, these findings indicate that large and small securities issued by the same borrower are close substitutes. (Reprinted by permission of the publisher.)

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Blocks, liquidity, and corporate control

Article Abstract:

The paper develops a simple model of corporate ownership structure in which costs and benefits of ownership concentration are analyzed. The model compares the liquidity benefits obtained through dispersed corporate ownership with the benefits from efficient management control achieved by some degree of ownership concentration. The paper reexamines the free-rider problem in corporate control in the presence of liquidity trading, derives predictions for the trade and pricing of blocks, and provides criteria for the optimal choice of ownership structure. (Reprinted by permission of the publisher.)

Models, Management, Business enterprises

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The Slope of the Credit Yield Curve for Speculative-Grade Issuers

Article Abstract:

The author examines the use of credit yield curves for rating investments. Topics include maturity rating, risk factors, and the use of protection.

Evaluation, Financial services industry, Financial services, Services, Investment advisers, Credit ratings, Thomson Corp. Thomson Financial Investment Banking/Capital Markets

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