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| Author: | Datta, S. Iskandar-Datta, M. Patel, A. |
| Title: | The pricing of initial public offers of corporate straight debt. |
| Journal: | Journal of Finance
1997 : MAR, VOL. 52:1, p. 379-396 |
| Index terms: | INITIAL PUBLIC OFFERINGS DEBT BOND RATINGS STOCK MARKET LISTING JUNK BONDS |
| Language: | eng |
| Abstract: | This study examines the initial-day and aftermarket price performance of corporate straight debt IPOs. The authors find that IPOs of speculative grade debt are underpriced like equity IPOs, while those rated investment grade are overpriced. IPOs of investment grade debt are typically issued by firms listed on the major exchanges and underwritten by prestigious underwriters. In contrast, junk bond IPOs are more likely to behandled by less prestigious underwriters and are typically issued by OTC firms. The analysis also reveals that bond rating, market listing of the firm, and investment banker are significant determinants of bond IPO returns. |
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