ANALYSIS OF CORPORATE BOND ISSUANCE AND THE HISTORICAL LEVEL OF COUPON RATES: INDONESIAN CASE
Romzi, Dr. Sumiyana, M.Si., Akt
2013 | Tesis | S2 Magister Manajemen-
In a globalization era like today, investors are exposed to many types of investment tools which is by using technology will cause the flow of fund move 24 hours a day around the world with no boundaries. This phenomenon has been responded strategically by the managers to offer several types of investment to the investors to fund their companies, at least two types of common investment tools are likely to offer: equity and bond. This study only focuses on the bond, which are long-term bonds issued by firms in Indonesia. This study attempts to examine whether the bond issuances are influenced by the level of interest rate in order to borrow cheaply from the investors. This study also uses credit spread, ratio of debt and equity issued in the market, firms’ profitability, size and free cash flow as control variables. This study uses quantitative approach that tests some hypotheses by using ordinary least square (OLS). This study uses 82 data of bonds issued by nonbanking companies listed in Indonesia Stock Exchange and 35 data of bonds issued by banks during the year of 2000 – 2011. The result shows that the level of interest rates does influence the firms’ bond issuance. And interestingly, the result also shows that control variables included in this research only firm size which influences the firms’ bond issuance on both group; non-banking and banking samples. However, other control variables; debt to equity ratio in the market, firms’ profitability and free cash flow appear in the statistical result that they do not influence the firms’ bond issuance. Based on the analysis results, it can be concluded that bond issuance by corporations are influenced by the level of coupon rates, meaning that managers will probably issue more bonds when the coupon rates are relatively lower. Moreover, they also consider the firm size (total assets) when they borrow fund since size reflects the needs of fund to run the business; the larger the firms, the larger the amount of money needed to run the firms.
Kata Kunci : bonds, debt issuance, debt timing, interest rate
