Market timing in open market bond repurchases

Nadav Steinberg, Avi Wohl

Research output: Working paper / PreprintDiscussion paper


Bond repurchases are widespread in the US and other markets but data limitations have thus far prevented market-timing analysis. We fill this gap using unique daily data from Israel and show that firms time the market in their actual open-market bond repurchases. Firms repurchase their bonds following a decline in bond prices. The disclosure of bond repurchases results in significantly positive abnormal returns on the repurchased bonds and is followed by a positive drift in subsequent 5 trading days. The market reaction to actual bond repurchases is timelier when conducted within a preannounced repurchase program, and the impact is stronger when the firm repurchases high-yield bonds. Insiders’ net purchases increase prior to bond repurchases, and the abnormal return following a bond repurchase tends to be higher when it is preceded by positive net insider purchases. The results lend support to the information motive for bond repurchases.
Translated title of the contributionתזמון שוק ברכישות חוזרות של אגרות חוב קונצרניות
Original languageEnglish
Place of PublicationJerusalem
PublisherBank of Israel
Number of pages43
StatePublished - 2022

Publication series

NameDiscussion paper series / Bank of Israel, Research Department
PublisherBank of Israel

ULI Keywords

  • uli


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