3 Issuing costs of state guaranteed bonds - Financial Risk and ...

Annex 3 Analysis of missing issuing cost data
A3.2 Economic significance of differences between included and
excluded bonds
The characteristics of included and excluded bonds were observed to be largely similar. However,
differences between included and excluded bonds were also observed, particularly, issuance
volumes of included non-SG bonds were larger than issuance volumes of excluded non-SG bonds.
This finding could be of importance to the analysis relating to issuing cost conducted. For instance,
smaller bonds may be less likely to be state guaranteed and also face higher issuing cost. If this is
the case, then the impact of state guarantees on issuing cost is likely to be overestimated.
To analyse the economic significance of differences in issuance volume of non-SG bonds included
and excluded in analyses relating to issuing cost, two checks were conducted.
A3.2.1 Re-estimation based on issuance volume
Firstly, the main empirical specification for the impact of state guarantees on issuing cost was reestimated
for samples of smaller and large issuance volume.
By considering small issuance volumes only, we attempt to correct for the possibility that
previously included non-SG bonds are unusually large.
Bonds were split on the basis of issuance volume. If a bond issue was larger than the median it was
included in the large issues sample and if it was smaller than the median it was included in the
small issues sample.
The re-estimation results are presented in Table 37. As per the models presented in Section 3, the
impact of state guarantees on issuing cost is in the expected direction, in the region of the same
magnitude and highly statistically significant whether the model is estimated on small issues or
large issues only.
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