How Large is the Borrowing Cost Advantage of State-Owned Enterprises?

We provide new evidence of lower borrowing costs for state-owned enterprises (SOEs). Using ORBIS ownership data matched to financing transactions in syndicated loan and bond markets, regressions and propensity score matching estimates confirm the lower financing costs for advanced and developing economies' SOEs, compared to private sector, and especially for hard currency borrowings. For loans, SOEs' financing advantage is moderate. For bonds, the advantage is large and up to -120bps. Financing advantage differs slightly but is present for different state ownership stakes. This confirms that SOEs can, with the right conditions, be an effective conduit for state-related capital raising.