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BPEA Article

Patterns of Corporate External Financing


IN RECENT YEARS THE CORPORATE bond market has absorbed an unprecedented volume of new issues. Far from dwindling away under the pressure of equity kickers and short-term maturities, as many predicted in 1968, net bond sales increased from a $12 billion annual rate in the last half of 1969 to $30 billion in the first half of this year. Several explanations for this upsurge have emphasized temporary factors, such as a sudden increase in desired liquidity following the Penn Central debacle and a catchup in bond issues that were delayed by tight money in 1969. But the continuing high level of bond issues raises questions that cannot be answered by resort to such transitory phenomena.


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