Reactions to the EDHEC Study “Optimal Design of Corporate Market Debt Programmes in the Presence of Interest-Rate and Inflation Risks”

Noël Amenc, Felix Goltz, Vincent Milhau & Masayochi Mukai

Author(s):

NoelAmenc

Professor of Finance and Director of EDHEC-Risk Institute.

FelixGoltz

Head of applied research at EDHEC-Risk Institute.

Vincent Milhau

Deputy Scientific Director at EDHEC-Risk Institue

Masayochi Mukai

Analyst at EDHEC-Risk Indices and Benchmarks.

EDHEC-Risk Institute has conducted extensive research into advanced debt management practices, including a study on the possibility of increasing firm value through the issuance of an optimal level of inflation-linked bonds, which would allow for a reduction in the variability of cash flows, net of debt costs. Supplementing the research documented in the EDHEC-Risk publication “Optimal Design of Corporate Market Debt Programmes in the Presence of Interest-Rate and Inflation Risks”, a call for reaction was issued seeking assessment of the study’s key conclusions. A bifurcated survey, with two separate sets of questionnaires, was issued to institutional investors and members of corporate finance departments – the two parties most qualified to provide professional insight. The results indicate that the topic is perceived as highly relevant to current investor concerns and issuers of corporate debt; moreover, they suggest that the issuance of inflationlinked bonds may provide a solution to both parties’ exposure to inflation risk.

Type: EDHEC Publication
Date: le 28/05/2012
Research Cluster : Finance

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