Företags motiv till finansiering med realränteobligationer
Independent thesis Advanced level (degree of Magister)Student thesisAlternative title
Corporate motives for financing through index-linked bonds (English)
The long-term external financing of a corporation is satisfied through the bond market where issues of index-linked bonds, which are discussed in this thesis, is one alternative. (Finnerty&Emery 2001) An index- linked bond is a debt instrument where the investor is guaranteed the principal and premium amount in real terms. As the bonds cash flows are indexed to the inflation this implies that the issuer of an index-linked bond assumes an inflation risk. Purpose: The purpose of this thesis is to describe and examine corporate motives for choosing index-linked bonds as way of financing their business. Realization: Primary data was collected through interviews with corporate issuers of non-swapped index-linked bonds. Results: From our research it has been acknowledged that both internal and external factors determine the decision to issue index-linked bonds. The most important internal reason for the issuance was that this type of financing implies matching advantages, which helps lowering the companies’ risks. This is achieved by balancing the size and time of the cash inflows with the cash out- flows. Of the external factors we found that it is primary the financing cost that is of interest. The cost savings are primarily achieved because of the lower liquidity premium demanded when using index-linked bonds as a way of financing the business. We believe that this depends partly on the character of the investors and on market imperfections.
Place, publisher, year, edition, pages
Ekonomiska institutionen , 2003. , 112 p.
Master Thesis in Business Administration (Magisteruppsats från Internationella ekonomprogrammet), 2003:2
Business and economics, Cash flow matching, Corporate bonds, Donaldson och Fox, index-linked bonds
Economics and Business
IdentifiersURN: urn:nbn:se:liu:diva-1573OAI: oai:DiVA.org:liu-1573DiVA: diva2:18897