ANALYSIS OF CORPORATE BOND ISSUANCE AND THE HISTORICAL LEVEL OF COUPON RATES: INDONESIAN CASE

In a globalization era like today, investors are exposed to many types of investment tools which is by using technology will cause the flow of fund move 24 hours a day around the world with no boundaries. This phenomenon has been responded strategically by the managers to offer several types of investment to the investors to fund their companies, at least two types of common investment tools are likely to offer: equity and bond. This study only focuses on the bond, which are long-term bonds issued by firms in Indonesia. This study attempts to examine whether the bond issuances are influenced by the level of interest rate in order to borrow cheaply from the investors. This study also uses credit spread, ratio of debt and equity issued in the market, firms� profitability, size and free cash flow as control variables. This study uses quantitative approach that tests some hypotheses by using ordinary least square (OLS). This study uses 82 data of bonds issued by nonbanking companies listed in Indonesia Stock Exchange and 35 data of bonds issued by banks during the year of 2000 � 2011. The result shows that the level of interest rates does influence the firms� bond issuance. And interestingly, the result also shows that control variables included in this research only firm size which influences the firms� bond issuance on both grou