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Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Sergey Davydov
Influence of Covenants on Yield of Bank Bonds
Economics
(Bachelor’s programme)
7
2016
This paper examines the effect of covenants on the yeild of bank bonds. The object of this work are the foreign banks with bonds in their debt portfolio. Total of 90 European banks and bond issues 485 cases were analyzed. The maturity of the bond ranges from 7 to 13 years. The subject of this work are different kinds of determinants, which may be the causes of differences in yield spreads on bonds of the banking sector. The main focus of this work is given to the presence of covenants in the issuance of the bond loan. The aim of this paper is to analyze the effect of covenants on bond yields and to test the hypothesis that the increase in yield can occur due to the addition of different kinds of covenants in the conditions of bond issues.

At the first stage, there is a model consisting of the yield spread between corporate and government bonds as the dependent variable and the 12 explanatory variables that contain information about the characteristics of bonds and banks. After specification of the model and add to it information about the covenants there is a regression analysis, the results of which lead to the conclusion about the impact on the performance of covenants yield spreads.

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