search query: @author Sorenson, E. H. / total: 1
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| Author: | Kidwell, D. S. Sorenson, E. H. Wachowichz, J. M. |
| Title: | Estimating the signaling benefits of debt insurance : the case of municipal bonds. |
| Journal: | Journal of Financial and Quantitative Analysis
1987 : SEP, VOL. 22:3, p. 299-313 |
| Index terms: | BONDS INSURANCE |
| Language: | eng |
| Abstract: | We examine the demand for municipal bond insurance in the framework of a competitive signaling equilibrium model. The pricing of new bond issues that are insured is compared to similar issues that are uninsured. According to the paper, the issuers who purchase bond insurance, on average, are able to reduce their new issue borrowing costs more than enough to offset the cost of the insurance premium. Furthermore, it is shown that the net benefit to the issuer increases as the credit quality of the bond decreases. |
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