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"Using a sample that comprises more than 14,000 new issues of corporate debt for the period 1970-2001, we examine the relation between debt issues and the level of interest rates relative to historical levels. Consistent with recent survey evidence, we find that companies issue more debt, more debt relative to investment spending, and more debt compared to equity when interest rates are low relative to historical rates. The effects continue to hold when we control for other variables that influence debt issuance and when we account for refinancing." Copyright (c) 2008 Financial Management Association International..

Warga, and seminar participants at the 1998 FMA meetings, the CFTC, and the First Annual Texas Finance Festival for discussions and comments helpful to the evolution of the paper. Mann acknowledges the support of the Charles Tandy American Enterprise Center. The views expressed are the authors' only and do not purport to represent the views of the Commodity Futures Trading Commission or its staff.

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