The Bondholder-Stockholder Conflict: The Relation between Debt Covenants and Bond Spreads
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Prior research on covenants show that they are frequently included in corporate debt agreements as means of mitigating bondholder-stockholder conflicts. As covenants should be more frequently included when there is a higher degree of bondholder-stockholder conflict, what is then the relation between covenants and spread? Our results show that on the Norwegian corporate debt market, bonds that include covenants have a higher spread than those that do not. The results of an OLS-regression using some of the most common covenants, Z’-score and bond spread shows that the 43 % of bond spread can be explained by whether the bond includes dividend restrictions, equity restrictions and poison puts, and the Z’-score of the issuer.
Place, publisher, year, edition, pages
2012. , 46 p.
bondholder-stockholder conflict, covenants, Z’-score, corporate debt, Norwegian bond market
IdentifiersURN: urn:nbn:se:uu:diva-176496OAI: oai:DiVA.org:uu-176496DiVA: diva2:535549
Subject / course
UppsokSocial and Behavioural Science, Law