Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms

Autores
Perez Artica, Rodrigo; Rabinovich, Joel; Zeolla, Nicolás Hernán
Año de publicación
2025
Idioma
inglés
Tipo de recurso
artículo
Estado
versión publicada
Descripción
Corporate bond issuances originating from developing and emerging market economies have emerged as the primary catalyst for the expansion of global debt following the Global Financial Crisis. Although Asia has dominated this trend, Latin American firms have significantly contributed, emerging as the second-largest issuers of corporate debt. Against this background, this article delves into the underlying motivations driving firms´ engagement in such borrowing activities. Traditionally, the prevailing narrative has underscored carry-trading as the predominant purpose for utilizing proceeds from foreign-denominated bonds. However, we challenge this hypothesis by adopting an innovative methodological approach. Rather than relying on ex-ante incentives based on global interest rate differentials, as commonly employed in the literature, we utilize firm-level data on the ex-post interest income earned by firms. Through this alternative methodology, we do not find evidence supporting the presence of carry-trading practices. Overall, our analysis supports precautionary motives. We find a stronger correlation between bond issuances and both cash holdings and capital expenditures.
Fil: Perez Artica, Rodrigo. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - Bahía Blanca. Instituto de Investigaciones Económicas y Sociales del Sur. Universidad Nacional del Sur. Departamento de Economía. Instituto de Investigaciones Económicas y Sociales del Sur; Argentina
Fil: Rabinovich, Joel. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina
Fil: Zeolla, Nicolás Hernán. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina
Materia
Corporate debt
Carry trade
Liquidity
Corporate investment
Nivel de accesibilidad
acceso abierto
Condiciones de uso
https://creativecommons.org/licenses/by/2.5/ar/
Repositorio
CONICET Digital (CONICET)
Institución
Consejo Nacional de Investigaciones Científicas y Técnicas
OAI Identificador
oai:ri.conicet.gov.ar:11336/291605
Acceder
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network_name_str CONICET Digital (CONICET)
spelling Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firmsPerez Artica, RodrigoRabinovich, JoelZeolla, Nicolás HernánCorporate debtCarry tradeLiquidityCorporate investmenthttps://purl.org/becyt/ford/5.2https://purl.org/becyt/ford/5Corporate bond issuances originating from developing and emerging market economies have emerged as the primary catalyst for the expansion of global debt following the Global Financial Crisis. Although Asia has dominated this trend, Latin American firms have significantly contributed, emerging as the second-largest issuers of corporate debt. Against this background, this article delves into the underlying motivations driving firms´ engagement in such borrowing activities. Traditionally, the prevailing narrative has underscored carry-trading as the predominant purpose for utilizing proceeds from foreign-denominated bonds. However, we challenge this hypothesis by adopting an innovative methodological approach. Rather than relying on ex-ante incentives based on global interest rate differentials, as commonly employed in the literature, we utilize firm-level data on the ex-post interest income earned by firms. Through this alternative methodology, we do not find evidence supporting the presence of carry-trading practices. Overall, our analysis supports precautionary motives. We find a stronger correlation between bond issuances and both cash holdings and capital expenditures.Fil: Perez Artica, Rodrigo. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - Bahía Blanca. Instituto de Investigaciones Económicas y Sociales del Sur. Universidad Nacional del Sur. Departamento de Economía. Instituto de Investigaciones Económicas y Sociales del Sur; ArgentinaFil: Rabinovich, Joel. Consejo Nacional de Investigaciones Científicas y Técnicas; ArgentinaFil: Zeolla, Nicolás Hernán. Consejo Nacional de Investigaciones Científicas y Técnicas; ArgentinaElsevier2025-06info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttp://purl.org/coar/resource_type/c_6501info:ar-repo/semantics/articuloapplication/pdfapplication/pdfhttp://hdl.handle.net/11336/291605Perez Artica, Rodrigo; Rabinovich, Joel; Zeolla, Nicolás Hernán; Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms; Elsevier; Latin American Journal of Central Banking; 7; 2; 6-2025; 1-212666-1438CONICET DigitalCONICETenginfo:eu-repo/semantics/altIdentifier/url/https://linkinghub.elsevier.com/retrieve/pii/S2666143825000092info:eu-repo/semantics/altIdentifier/doi/10.1016/j.latcb.2025.100171info:eu-repo/semantics/openAccesshttps://creativecommons.org/licenses/by/2.5/ar/reponame:CONICET Digital (CONICET)instname:Consejo Nacional de Investigaciones Científicas y Técnicas2026-08-25T14:56:57Zoai:ri.conicet.gov.ar:11336/291605instacron:CONICETInstitucionalhttp://ri.conicet.gov.ar/Organismo científico-tecnológicoNo correspondehttp://ri.conicet.gov.ar/oai/requestdasensio@conicet.gov.ar; lcarlino@conicet.gov.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:34982026-08-25 14:56:57.298CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicasfalse
dc.title.none.fl_str_mv Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
title Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
spellingShingle Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
Perez Artica, Rodrigo
Corporate debt
Carry trade
Liquidity
Corporate investment
title_short Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
title_full Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
title_fullStr Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
title_full_unstemmed Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
title_sort Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms
dc.creator.none.fl_str_mv Perez Artica, Rodrigo
Rabinovich, Joel
Zeolla, Nicolás Hernán
author Perez Artica, Rodrigo
author_facet Perez Artica, Rodrigo
Rabinovich, Joel
Zeolla, Nicolás Hernán
author_role author
author2 Rabinovich, Joel
Zeolla, Nicolás Hernán
author2_role author
author
dc.subject.none.fl_str_mv Corporate debt
Carry trade
Liquidity
Corporate investment
topic Corporate debt
Carry trade
Liquidity
Corporate investment
purl_subject.fl_str_mv https://purl.org/becyt/ford/5.2
https://purl.org/becyt/ford/5
dc.description.none.fl_txt_mv Corporate bond issuances originating from developing and emerging market economies have emerged as the primary catalyst for the expansion of global debt following the Global Financial Crisis. Although Asia has dominated this trend, Latin American firms have significantly contributed, emerging as the second-largest issuers of corporate debt. Against this background, this article delves into the underlying motivations driving firms´ engagement in such borrowing activities. Traditionally, the prevailing narrative has underscored carry-trading as the predominant purpose for utilizing proceeds from foreign-denominated bonds. However, we challenge this hypothesis by adopting an innovative methodological approach. Rather than relying on ex-ante incentives based on global interest rate differentials, as commonly employed in the literature, we utilize firm-level data on the ex-post interest income earned by firms. Through this alternative methodology, we do not find evidence supporting the presence of carry-trading practices. Overall, our analysis supports precautionary motives. We find a stronger correlation between bond issuances and both cash holdings and capital expenditures.
Fil: Perez Artica, Rodrigo. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - Bahía Blanca. Instituto de Investigaciones Económicas y Sociales del Sur. Universidad Nacional del Sur. Departamento de Economía. Instituto de Investigaciones Económicas y Sociales del Sur; Argentina
Fil: Rabinovich, Joel. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina
Fil: Zeolla, Nicolás Hernán. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina
description Corporate bond issuances originating from developing and emerging market economies have emerged as the primary catalyst for the expansion of global debt following the Global Financial Crisis. Although Asia has dominated this trend, Latin American firms have significantly contributed, emerging as the second-largest issuers of corporate debt. Against this background, this article delves into the underlying motivations driving firms´ engagement in such borrowing activities. Traditionally, the prevailing narrative has underscored carry-trading as the predominant purpose for utilizing proceeds from foreign-denominated bonds. However, we challenge this hypothesis by adopting an innovative methodological approach. Rather than relying on ex-ante incentives based on global interest rate differentials, as commonly employed in the literature, we utilize firm-level data on the ex-post interest income earned by firms. Through this alternative methodology, we do not find evidence supporting the presence of carry-trading practices. Overall, our analysis supports precautionary motives. We find a stronger correlation between bond issuances and both cash holdings and capital expenditures.
publishDate 2025
dc.date.none.fl_str_mv 2025-06
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
http://purl.org/coar/resource_type/c_6501
info:ar-repo/semantics/articulo
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/11336/291605
Perez Artica, Rodrigo; Rabinovich, Joel; Zeolla, Nicolás Hernán; Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms; Elsevier; Latin American Journal of Central Banking; 7; 2; 6-2025; 1-21
2666-1438
CONICET Digital
CONICET
url http://hdl.handle.net/11336/291605
identifier_str_mv Perez Artica, Rodrigo; Rabinovich, Joel; Zeolla, Nicolás Hernán; Beyond carry-trading: New insights into the uses of foreign-denominated bond issuances by Latin American firms; Elsevier; Latin American Journal of Central Banking; 7; 2; 6-2025; 1-21
2666-1438
CONICET Digital
CONICET
dc.language.none.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv info:eu-repo/semantics/altIdentifier/url/https://linkinghub.elsevier.com/retrieve/pii/S2666143825000092
info:eu-repo/semantics/altIdentifier/doi/10.1016/j.latcb.2025.100171
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
https://creativecommons.org/licenses/by/2.5/ar/
eu_rights_str_mv openAccess
rights_invalid_str_mv https://creativecommons.org/licenses/by/2.5/ar/
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:CONICET Digital (CONICET)
instname:Consejo Nacional de Investigaciones Científicas y Técnicas
reponame_str CONICET Digital (CONICET)
collection CONICET Digital (CONICET)
instname_str Consejo Nacional de Investigaciones Científicas y Técnicas
repository.name.fl_str_mv CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicas
repository.mail.fl_str_mv dasensio@conicet.gov.ar; lcarlino@conicet.gov.ar
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score 13.24418

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