Determinants of Corporate Bond Yield: Empirical Evidence from Indonesia

Megananda, Danthi and Endri, Endri and Oemar, Fahmi and Husna, Asmaul (2020) Determinants of Corporate Bond Yield: Empirical Evidence from Indonesia. Journal of Asian Finance, Economics and Business, 8 (3). pp. 1135-1142. ISSN 2288-4637

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Abstract

This study aims to examine the factors that determine bond yields in infrastructure companies listed on the Indonesia Stock Exchange. The research sample used 31 bonds issued by the company during the 2015–2019 period. The data analysis method to estimate the determinant of bond yield uses multiple regression models. The results prove that the increase in the coupon rate causes bond yields to increase, while the inflation rate has the opposite effect of decreasing bond yield. Interest rate, exchange rate, duration, and bond rating variables cannot affect the bond yield. The results of this study imply that investors will be interested in investing in bonds with better yields if the company has to set a higher coupon rate, especially in economic conditions that experience low inflation rates. Interest rates and exchange rates as macroeconomic variables have not been considered by investors in purchasing bonds. Bond characteristic factors, namely, the duration and rating of the bonds, are considered less important factors in bond investment decisions because they are more oriented towards getting higher yields. Therefore, further research needs to be explored further related to the behavior of Indonesian bond investors who may have different characters from investors in other countries.

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