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The Determinants of the Maturity of Corporate Debt Issues
Author(s) -
GUEDES JOSE,
OPLER TIM
Publication year - 1996
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1996.tb05227.x
Subject(s) - maturity (psychological) , debt , monetary economics , asset (computer security) , order (exchange) , investment (military) , business , bond , financial economics , term (time) , economics , actuarial science , finance , psychology , developmental psychology , physics , computer security , quantum mechanics , politics , computer science , political science , law
We document the determinants of the term to maturity of 7,369 bonds and notes issued between 1982 and 1993. Our main finding is that large firms with investment grade credit ratings typically borrow at the short end and at the long end and of the maturity spectrum, while firms with speculative grade credit ratings typically borrow in the middle of the maturity spectrum. This pattern is consistent with the theory that risky firms do not issue short‐term debt in order to avoid inefficient liquidation, but are screened out of the long‐term debt market because of the prospect of risky asset substitution.