The 2016 Bond Market

Here is a quick summary of the 2016 corporate bond market. The outstanding value of corporate bonds exceeded 8.5 trillion dollars, total issuance was around 1.5 trillion dollars, close to 70% were callable, around 92% had a fixed coupon, and the average maturity decreased to 15.8 years. And here are the figures.OutstandingIssuanceCallableFixed-FloatMaturity.png

First blog post

This is my very first blog post. The graphs depicts the yield spread between corporate and Treasury debt for 3 credit ratings. The credit spread puzzle refers to the large yield difference between corporate and Treasury debt given that actual default probabilities are low for investment grade firms.

My first publication The Levered Equity Risk Premium and Credit Spreads provides a rational explanation for the large yield difference based on macroeconomic risk and recursive preferences. CreditRisk