3 Issuing costs of state guaranteed bonds - Financial Risk and ...
3 Issuing costs of state guaranteed bonds - Financial Risk and ...
3 Issuing costs of state guaranteed bonds - Financial Risk and ...
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2 Overview <strong>of</strong> <strong>state</strong> guarantee schemes<br />
Figure 5: <strong>Issuing</strong> cost by issuer rating, SG <strong>and</strong> non-SG <strong>bonds</strong><br />
24<br />
<strong>Issuing</strong> cost, z-spread/zero discount margin<br />
0 50 100 150 200 250 300<br />
Source: Bloomberg <strong>and</strong> Bankscope<br />
State <strong>guaranteed</strong> <strong>bonds</strong><br />
AAA AA+ AA AA- A+ A A- BBB+<br />
Bond rating<br />
<strong>Issuing</strong> cost, z-spread/zero discount margin<br />
0 50 100 150 200 250 300<br />
Non-<strong>state</strong> <strong>guaranteed</strong> <strong>bonds</strong><br />
AAA AA+ AA AA- A+ A A- BBB+<br />
Bond rating<br />
Figure 6 confirms this hypothesis. A large concentration <strong>of</strong> SG <strong>bonds</strong> is <strong>guaranteed</strong> by AAA-rated<br />
sovereigns <strong>and</strong> associated to this are low issuing <strong>costs</strong>. There is also some evidence <strong>of</strong> a link<br />
between sovereign ratings <strong>and</strong> issuing <strong>costs</strong> as sovereign ratings fall.
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