Debt Composition, Institutional Demand, and Corporate Investment: Evidence from Thailand

This paper studies commercial paper in Thailand. We follow 187 firms from first commercial paper issuance and examine debt composition, institutional holding, investment, and bridge-financing risk. Among firms with no bond outstanding at first issuance, 41.7% acquire one within eight quarters, compared with 4.6% of matched non-entrants, and debt-instrument concentration falls after entry. From 2021, mutual funds hold roughly 75% to 85% of outstanding commercial paper, concentrated in larger and better-rated issuers, with short-term bond funds holding the largest share. Fund-category growth is associated with issuance, but the available designs provide no robust evidence that fund demand determines which firms issue. First commercial paper issuance is not associated with an increase in capital expenditure, while liquid assets rise by 1.70 percentage points of assets and account for most of the accompanying asset growth. The median entrant termed out commercial paper usage, but most firms that eventually issue bonds continue using commercial papers. The evidence suggests that commercial paper can widen access to longer-term capital markets while concentrating rollover exposure among firms with fewer alternatives.