Analysis of the Determinants of Initial Corporate Bond Offering Yields in Developing Countries (on the Case of the Retail Industry)

Annotation The aim of research is investigation of the determinants of the initial offering of corporate bonds of developing countries, on the example of the Retail industry, and on the basis of the previously studied literature. Justification of the choice of a separate industry can be made on the basis of articles N.I. Berzon. and Melitskova TM (2013) and Teplova T.V & Sokolova T.V. (2018) in which the authors show the significant influence of the sectoral affiliation of firms in explaining the differences in the value of their debt instruments. The main hypotheses, evaluated by the method of regression analysis, based on the research studied and described in the first chapter of research, indicate the importance of a number of factors in forming the market value of corporate bonds in the retail industry. These factors can be grouped as follows: 1. Indicators of company’s size (EV, Total assets, Revenue) 2. Indicators of debt load (total assets / equity capital) and specifics of bond issues (volume of issues and maturity of bonds) 3. Factors indicating the operating efficiency of companies (EBITDA, EBITDAR, ROA, EV / EBITDA and others) 4. Macroeconomic indicators (GDP, Inflation - CPI) 5. Sectoral indicators inherent to the Retail industry (Rental payments, EBITDAR) 6. Specific indicators (Share of independent directors of the company, Share of women on the board of directors, whether the CEO is the head of the board of directors, presence of an audit in the company) 7. Others From the database: Bloomberg, Thompson Reuters, Capital IQ were downloaded and cleared of outliers and inadequate values, yield to maturity on initial offering of corporate bonds in developing countries. As a result, it was obtained 100 observations of initial offering from 1998 to 2018. For data estimation were used both pool regressions for cross-sectional data and models taking into account the panel data - models with fixed effects and random effects. As a result of evaluating were identified variables as reducing the cost of debt instruments of companies, such as: EV/EBITDA, GDP, the share of independent directors on the company's board, the amount of R&D expenditures, long-term debt/EBITDA, the share of women on the company's board of directors, and dummy variables audit of the company (> 3 people) and whether the CEO is the head of the board of directors, also the indicators of the companies size (Revenue, Enterprise Value, Total assets) as well as increasing the required YTM of companies: EBITDA, EBITDAR, CPI, Share of free-float stocks, the cost of rental payments, the volume of the bond issue. Some of the variables had a non-linear effect on the dependent variable of YTM bonds, such as: ROA and the term to maturity of the bonds at the time of issue.