Economics, Econometrics and Finance
4 years ago

Longer government debt maturity leads to steeper credit term structures.

SSRN Electronic Journal
Government Debt Maturity and Term Structure of Credit Spreads
Xiang Gao

Paper Summary

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Government borrowing behavior affects private sectors by influencing credit term structures. Longer government debt maturity leads to steeper credit term structures in corporate bond markets. This relationship is stronger for riskier corporate bonds. Treasury bond supply impacts credit spreads, especially near the maturity where the supply shock occurs.