The Determinants of Long-Term Corporate Debt Issuances

A significant proportion of the debt issued by investment-grade firms has maturities greater than 20 years. In this paper we provide evidence that gap-filling behavior is an important determinant of these very long-term issues. Using data on individual corporate debt issues between 1987 and 2009, we find that gap-filling behavior is more prominent in the very long end of the maturity spectrum where the required risk capital makes arbitrage costly. In addition, changes in the supply of long-term government bonds affect not just the choice of maturity but also the overall level of corporate borrowing.