Global dollar credit and carry trades: a firm-level analysis

Published in: Review of Financial Studies, vol 30, no 3, 2017, pp 703-49.

We conduct a firm-level analysis of borrowing in US dollars by non-financial corporates from outside the United States. The dataset combines bond issuance data with firm-level financial information. We find that firms with already high cash holdings are more likely to issue US dollar-denominated bonds, and that the proceeds of the bond issue add to cash holdings. The tendency to add cash is more pronounced during periods when the dollar carry trade is more favourable and is prevalent for emerging market firms.

JEL classification: F32, G15, G30

Keywords: emerging markets, bond issuance, surrogate intermediaries