Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds

This paper aims to create a bondholders’ protection index (BPI) and to investigate what the influence of this index would be on multimarket funds’ allocation in corporate bonds. Understanding this relation is relevant because only about 1.36% of multimarket funds’ portfolios correspond to debentures...

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Autores principales:	Thayse Machado Guimarães, Rodrigo Fernandes Malaquias
Formato:	article
Lenguaje:	EN PT
Publicado:	FUCAPE Business School 2020
Materias:	bondholders’ protection index corporate bonds multimarket funds risk corporate financing Business HF5001-6182
Acceso en línea:	https://doaj.org/article/b18522e0812b4daf9f46c4edeecff752
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id	oai:doaj.org-article:b18522e0812b4daf9f46c4edeecff752
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spelling	oai:doaj.org-article:b18522e0812b4daf9f46c4edeecff7522021-11-11T15:48:08ZBonds, Bondholders Protection and Asset Allocation of Multimarket Funds1807-734X10.15728/bbr.2020.17.2.1https://doaj.org/article/b18522e0812b4daf9f46c4edeecff7522020-01-01T00:00:00Zhttp://www.redalyc.org/articulo.oa?id=123063098001https://doaj.org/toc/1807-734XThis paper aims to create a bondholders’ protection index (BPI) and to investigate what the influence of this index would be on multimarket funds’ allocation in corporate bonds. Understanding this relation is relevant because only about 1.36% of multimarket funds’ portfolios correspond to debentures. This study advances the literature by covering a topic little discussed in a Brazilian context, proposing the creation of a BPI, which would be related to the number of automatic maturity clauses, which guarantee immediate payment to bondholders in cases of the rupture of a contract. This research comprised 926 debentures series issued in Brazil from 2009 to 2017, and 1,753 multimarket funds, which allocated some portfolios’ percentage in these securities. In creating the BPI, we contemplated 15 restrictive clauses, which the most common correspond to negligent business performance, liquidation, dissolution and bankruptcy, and restrictions related to company structure. Moreover, we examined less common restrictive clauses as well, including indebtedness policy, shares issuance and amortization, and ratings downgrading. Regarding data analysis, we employed multiple linear regression models, with pooled estimators, applying the standard error correction by White’s robust matrix (1980). The main results suggest that BPI positively effects multimarket funds’ allocation in debentures. Furthermore, this influence is more intense in indentures with higher number of clauses with automatic maturity. Thus, this study contributes to literature about restrictive clauses, since it demonstrates that debentures’ flexible and adaptable structure seems to be interesting for the main bondholders in Brazil.Thayse Machado GuimarãesRodrigo Fernandes MalaquiasFUCAPE Business Schoolarticlebondholders’ protection indexcorporate bondsmultimarket fundsriskcorporate financingBusinessHF5001-6182ENPTBBR: Brazilian Business Review, Vol 17, Iss 2, Pp 132-150 (2020)
institution	DOAJ
collection	DOAJ
language	EN PT
topic	bondholders’ protection index corporate bonds multimarket funds risk corporate financing Business HF5001-6182
spellingShingle	bondholders’ protection index corporate bonds multimarket funds risk corporate financing Business HF5001-6182 Thayse Machado Guimarães Rodrigo Fernandes Malaquias Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds
description	This paper aims to create a bondholders’ protection index (BPI) and to investigate what the influence of this index would be on multimarket funds’ allocation in corporate bonds. Understanding this relation is relevant because only about 1.36% of multimarket funds’ portfolios correspond to debentures. This study advances the literature by covering a topic little discussed in a Brazilian context, proposing the creation of a BPI, which would be related to the number of automatic maturity clauses, which guarantee immediate payment to bondholders in cases of the rupture of a contract. This research comprised 926 debentures series issued in Brazil from 2009 to 2017, and 1,753 multimarket funds, which allocated some portfolios’ percentage in these securities. In creating the BPI, we contemplated 15 restrictive clauses, which the most common correspond to negligent business performance, liquidation, dissolution and bankruptcy, and restrictions related to company structure. Moreover, we examined less common restrictive clauses as well, including indebtedness policy, shares issuance and amortization, and ratings downgrading. Regarding data analysis, we employed multiple linear regression models, with pooled estimators, applying the standard error correction by White’s robust matrix (1980). The main results suggest that BPI positively effects multimarket funds’ allocation in debentures. Furthermore, this influence is more intense in indentures with higher number of clauses with automatic maturity. Thus, this study contributes to literature about restrictive clauses, since it demonstrates that debentures’ flexible and adaptable structure seems to be interesting for the main bondholders in Brazil.
format	article
author	Thayse Machado Guimarães Rodrigo Fernandes Malaquias
author_facet	Thayse Machado Guimarães Rodrigo Fernandes Malaquias
author_sort	Thayse Machado Guimarães
title	Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds
title_short	Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds
title_full	Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds
title_fullStr	Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds
title_full_unstemmed	Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds
title_sort	bonds, bondholders protection and asset allocation of multimarket funds
publisher	FUCAPE Business School
publishDate	2020
url	https://doaj.org/article/b18522e0812b4daf9f46c4edeecff752
work_keys_str_mv	AT thaysemachadoguimaraes bondsbondholdersprotectionandassetallocationofmultimarketfunds AT rodrigofernandesmalaquias bondsbondholdersprotectionandassetallocationofmultimarketfunds
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Bonds, Bondholders Protection and Asset Allocation of Multimarket Funds

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