Title: European Bond Issuers
Authors: CARIBONI JESSICAHALLAK ISSAMRANCAN MICHELA
Publisher: Publications Office of the European Union
Publication Year: 2017
JRC N°: JRC106348
ISBN: 978-92-79-77044-9
ISSN: 1831-9424
Other Identifiers: EUR 28924 EN
OP KJ-NA-28924-EN-N
URI: http://publications.jrc.ec.europa.eu/repository/handle/JRC106348
DOI: 10.2760/591985
Type: EUR - Scientific and Technical Research Reports
Abstract: The recent financial and sovereign crises emphasised the need to further integrate the European financial system. In particular, the overreliance on bank financing coupled with a segmented financial system affected corporate growth in an uneven fashion across countries, thus widening existing economic gaps. The European Banking Union constitutes a major step towards integration; the construction of the Capital Markets Union comes next in the policy agenda. In 2015, the Juncker Commission launched a vast programme of reforms with the purpose to enhance the European Capital Market Union. The Action Plan on Building a Capital Market Union mentions the easier access to capital markets across Europe as a major objective in the construction, and the first of the three stated objectives of the Capital Market Union is to “broaden the sources of financing in Europe towards nonbank financing by giving a stronger role to capital markets.” This study aims at contributing to the Capital Market Union plan by providing an analysis of the European non-financial companies, which issue bonds. Bonds are debt instruments traded in markets, and constitute a traditional alternative to bank loans. The study investigates the characteristics of bond issuers as well as the respective bond terms, in the period 2004-2015. We use the databank of bonds published by Dealogic DCM, that we linked to Bureau van Dijk ORBIS to extract financial information about bond issuers. Our findings show first that the crisis led to a contraction of the bond amounts issued and to a shortening of the maturities; yet, in the aftermath of the crisis, riskier companies issued larger bond amounts. Second, bond issuers are significantly different from non-bond issuers; for instance, they are larger and older, and listed firms are more likely to issue bonds. Differences are comparable whether we consider the full sample, the sample of large firms, or the sample of listed companies. Yet, leverage is an exception: consistently with previous studies, we do find that among listed firms, bond issuers are more leveraged; the difference vanishes as we consider the full sample. Last, investigating bond terms, we find that larger companies are likely to have more balanced maturity term structures of bonds. The reports suggest a number of variations among corporations and bond terms over time, which should be subject to further analysis.
JRC Directorate:Growth and Innovation

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