Does leverage matter to market spread ?

• Main Authors: Bakri, Mohammed Hariri, Seng, Ngau Duo, Md Razak, Mohamad Idham, Zakaria, Shahsuzan
• Format: Article
• Language: English
• Published: Primrose Hall Publishing Group 2020
• Online Access: http://eprints.utem.edu.my/id/eprint/24147/2/111206_BAKRI_2020_E_R.PDF; http://eprints.utem.edu.my/id/eprint/24147/; https://www.ijicc.net/images/vol11iss12/111206_Bakri_2020_E_R.pdf

Securitization includes the transfer of illiquid resources to investors where such exchange is supported by the issuance of obligation securities called Asset-Backed Debt Securities (ABS) through a Special Purpose Vehicle (SPV). The under-utilisation of bonds or the absence of enhancement of the firm credit portfolio resulted in financial difficulties being faced by companies during the financial crisis in 1997. The fundamental focus in this investigation is on the determinants of primary market spread on RMBS, CMBS and ABS, and this study intends to inspect 12 years of information, from 2004 to 2016. Past examinations have left gaps in this area of research. The research objectives are the investigation of the determinants that incorporate domestic macroeconomic variables. The exploration will adopt a quantitative technique in investigating the information gathered, which is focused on pools Ordinary Least Square (OLS) and panel data. Regarding the primary market spread in Malaysia, factors such as debt to equity showed significance in the primary market spread in the control models, and originators may want to consider this economic issue before issuing securitized products.