ABSTRACT
The aim of this chapter is to reveal the determinants of the corporate bond (CB) recovery rate in both developed and emerging markets. We analyze the influence of bond issue characteristics, the issuer’s financial conditions and macroeconomic variables. The originality of our research is that, first, we consider an extended sample of CB from emerging markets with a focus on Russia. Second, a distinguishing feature of our research is a comparative analysis of the factors that significantly influence the recovery rate in developing and developed markets. Third, our paper is focused on the bonds of financial companies which occupy a high share in many emerging markets. We reveal that bankruptcy initiation reduces the recovery rate for both groups of markets. In developed markets, the seniority of bond issues has a significant positive effect on the recovery rate, while in emerging markets collateral for bonds plays a key role. The effect of company size and the share of long-term debt is significant only for emerging markets. The role of the institutional environment is important: the rule of law index has a positive effect on the recovery rate.
