Key Determinants of Spillover Effect of Bond Default

After the epidemic of Covid-19, the spillover effects of the global economy are very common, especially in the bond market, which has attracted widespread attention from investors. Bond defaults not only affect defaulting companies, but also affect other companies in the network, affecting their bond prices. In this context, this paper analyzes the spillover effect of bond default in the context of the global economic slowdown caused by the COVID-19 epidemic. Based on theoretical methods, this article identifies three key determinants of bond default spillover effects. The three key determining factors identified in this study are information spillover, counterparty risk, and investor psychology. These three key determining factors may help later scholars understand the spillover effects of bond defaults. Based on these three key determining factors, this article also proposes some possible strategic suggestions to mitigate the impact of bond default spillovers and prevent systemic risks in the economy.