Standard bonds dispense investors of complex contractual analysis and sophisticated calculus in secondary markets transactions. This paper - based in non-standard bond contracts - investigates the effects of controlling statistically contractual differences: would the bond ratings be sufficient to capture interest rates' costs of its issues? We take a sample of 24 bond issues in the period from 1999 to 2001 in order to verify if the difference in corporate bond covenants, when comparing issues with high rating and low rating, are statistically significant (binomial distribution). We conclude that, for high ratings, interest rate reflects standard features due to rating. For low ratings, standard features do not capture specific contractual difference, like established reinvestment and guarantee.
Rating; interest rate; standardization; corporate bonds; covenants