The Importance of Sovereign Bond Benchmarks for Corporate Debt Issuance

40 Pages Posted: 24 Feb 2019 Last revised: 29 Nov 2021

See all articles by Sjoerd van Bekkum

Sjoerd van Bekkum

Erasmus University

Bruce D. Grundy

RSFAS; University of Melbourne

Patrick Verwijmeren

Erasmus University Rotterdam (EUR)

Date Written: November 22, 2021


We show that sovereign bond benchmarks are important determinants of corporate bond issuance
and maturity. Sovereign bond issues that increase a country’s maximum maturity are followed by
increases in the maximum maturity of corporate issues. Our results suggest that by providing
benchmark rates, long-maturity government issues complement the issuance of similar-maturity
corporate issues. Sovereign and corporate bond issues can also be substitutes, but we find that this substitutability requires the availability of a high-quality sovereign bond benchmark. Our findings highlight the role that sovereign debt and its maturity play in capital market development.

Keywords: Corporate bond issuance, Sovereign bond issuance, Bond maturity, Sovereign benchmark, Reference rates, Gap Filling

JEL Classification: G12, G15, G18, G32, H63

Suggested Citation

van Bekkum, Sjoerd and Grundy, Bruce D. and Verwijmeren, Patrick, The Importance of Sovereign Bond Benchmarks for Corporate Debt Issuance (November 22, 2021). Available at SSRN: or

Sjoerd Van Bekkum

Erasmus University ( email )

P.O. Box 1738
Rotterdam, NL 3062 PA

Bruce D. Grundy

RSFAS ( email )

Kingsley Street
Acton ACT

University of Melbourne ( email )

Faculty of Economics & Commerce
Department of Finance
Melbourne VIC, 3010
+61 3 8344 9083 (Phone)
+61 3 8344 6914 (Fax)

Patrick Verwijmeren (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA

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