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Structured Eurobonds

Title data

Hild, Alexandra ; Herz, Bernhard ; Bauer, Christian:
Structured Eurobonds.
Bayreuth : Universität Bayreuth , 2011 . - (Wirtschaftswissenschaftliche Diskussionspapiere der Universität Bayreuth, Rechts- und Wirtschaftswissenschaftliche Fakultät ; 07-11 )

Official URL: Volltext

Abstract in another language

In this article, an alternative eurobond approach is developed by applying an asset-backed security (ABS) transaction to a pool of eurozone sovereign bonds. Based on the new approach two different rules to distribute the associated interest gains are analyzed. Within the ABS structure a special purpose vehicle buys a portfolio of eurozone sovereign bonds (pooling) and issues a set of subordinated eurobonds with varying risk and rating (tranching). A large share of less risky securities is created as structuring concentrates the default risk in one part of the capital structure. A trust fund covers first losses in case of a country default. This approach has three major advantages. First, all eurozone countries can gain from eurobonds. These benefits are driven by partial liability, which also limits moral hazard, and the distribution of interest gains to all participating countries. Second, the approach is very flexible and quickly implementable. Finally, it is in line with European Union law.

Further data

Item Type: Working paper, Diskussionspapier
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics I > Chair Economics I - Univ.-Prof. Dr. Bernhard Herz
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics I
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 20 May 2015 09:19
Last Modified: 04 Apr 2019 05:40
URI: https://eref.uni-bayreuth.de/id/eprint/13544