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

Figure 12: SG and non-SG bond issuing costs by bond rating
Issuing cost, z-spread/zero discount margin
0 50 100 150 200 250 300
AAA (n=165)
State guaranteed bonds
AA+ (n=65)
AA (n=2)
AA- (n=0)
A+ (n=0)
A (n=0)
A- (n=0)
BBB+ (n=7)
Bond rating
Issuing cost, z-spread/zero discount margin
0 50 100 150 200 250 300
3 Issuing costs of state guaranteed bonds
Non-state guaranteed bonds
AAA (n=4)
AA+ (n=5)
AA (n=6)
AA- (n=42)
A+ (n=15)
A (n=4)
A- (n=3)
BBB+ (n=0)
Bond rating
Note: Issuing costs are measured by the z-spread (for fixed rate bonds) and the zero discount margin (for non-fixed rate bonds) based
on the CBBT pricing source.
Bonds with extreme issuing costs of less than zero and more than the 95 th percentile were dropped as they most likely reflected bond
characteristics outside the scope of the analysis and reporting errors
Bond ratings are not available for a number of bonds, however, this missing data is distributed similarly across SG and non-SG bonds
(see Annex 3 for details)
Source: Bloomberg
Finally, Figure 13 shows SG bond issuing costs by sovereign rating. In general, higher sovereign
ratings are associated with lower issuing costs for SG bonds. Additionally, for a given sovereign
rating, there is dispersion in SG bond issuing costs, as seen in Figure 12 for bond ratings.
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