Corporate Debt Structure with Home and International Currency Bias

Matteo Maggiori; Brent Neiman; Jesse Schreger

doi:10.3386/w31891

Corporate Debt Structure with Home and International Currency Bias

Matteo Maggiori, Brent Neiman & Jesse Schreger

Working Paper 31891

DOI 10.3386/w31891

Issue Date November 2023

We explore the consequences of global capital market segmentation by currency for the optimal currency composition of borrowing by firms. Global bond portfolios are driven by the currency of denomination of assets as investors prefer to lend in their home currency or the international currency, the US Dollar. Larger and more productive firms select into foreign currency issuance. International segmentation results in a quantity-dimension of the exorbitant privilege whereby US firms that only issue in the domestic currency benefit from being able to more easily borrow from global investors.

Prepared for the IMF Jacques Polak Annual Research Conference in honor of Kenneth Rogoff. Portions of this research were previously circulated as part of the working paper version of “International Currencies and Capital Allocation.” We thank Hannah Firestone and Serdil Tinda for outstanding research assistance. Our analysis makes use of data that are proprietary to Morningstar and/or its content providers. Neither Morningstar nor its content providers are responsible for any of the views expressed in this article. This document includes data derived from data provided under licence by Dealogic Limited. Dealogic Limited retains and reserves all rights in such licensed data. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Jesse Schreger
Financial support was provided by the Harvard Business School Doctoral Programs Office, Princeton University, and a Harvard University International Economics grant. Markit had the right to review this paper for disclosure of proprietary data and for prejudicial statements regarding Markit or its industry. Schreger: No interests to disclose. Hébert: Hébert’s spouse works in the financial services industry and has business interactions with firms involved in the litigation described in this paper. His spouse has not contributed to or participated in the preparation of this paper, and neither Hébert nor his spouse have a direct or material indirect financial interest in the outcome of the litigation.
MARC RIS BibTeΧ

Corporate Debt Structure with Home and International Currency Bias

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