The Role of Credit Rating of the Eurobond Issuers from Central and Eastern Europe

Sylwia Frydrych

Abstract


Theoretical background: The increase in the issuance of Eurobonds by the issuers from Central and Eastern Europe has become a reason for considering the impact of the issuer’s creditworthiness assessment on the interest rate of the coupon of the issued debt instruments.

Purpose of the article: The aim of the study was to assess whether having a creditworthiness assessment from more than one agency affects the interest rate on the Eurobond coupon. This objective was achieved through the process of analysis of the ratings assigned by the rating agencies. Based on the analysis of the literature and the available data, the research hypothesis was developed and verified in an empirical study. The results were analyzed in the discussion section.

Research methods: The credit ratings for the Eurobonds corporate and government issuers, announced on the issue date, have been analyzed. The analysis covered the fixed interest rate debt instruments issued in EUR in the years 2005–2020 (the first half of the year). The empirical research was carried out using the observation method, the analysis of source documents, and the method of deduction.

Main findings: The results of the conducted research indicate that the coupon rate is not affected by the number of ratings given to the issuer. Due to the fact that the lowest average coupon interest in 2005–2020 was held by Eurobonds of the issuers with one credit rating, there is no need for an additional creditworthiness assessment by other agencies, and for any additional costs to be incurred by the issuer. It is one of the few studies on the Central and Eastern Europe market of which the author is aware.


Keywords


credit rating; Eurobond; creditworthiness assessment

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References


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DOI: http://dx.doi.org/10.17951/h.2020.54.4.31-40
Date of publication: 2020-12-29 19:34:54
Date of submission: 2020-08-11 19:56:02


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