Market for Corporate Bonds

Write some point regarding Market for Corporate Bonds.

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Market for Corporate Bonds:

• At the end of year 2007, the amount of corporate and foreign debt exceptionally was $10.1 trillion, making it the second biggest part of U.S capital market. The biggest was the market for corporate equity, with a value of $20.8 trillion. Finally, the market for state and local government debt totaled around $2.1 trillion.

• The biggest investors in corporate bonds are life insurance companies and pension funds, with trades in such market tending to be in much large blocks of securities.

• Less than 1 % of all corporate bonds are traded on exchanges. Most of the secondary market transactions for corporate bonds occur via dealers in over-the-counter (OTC) market.

• Only a small number of net bonds which exist really trade on a single day. As an outcome, the market for corporate bonds is thin as compared to the market for corporate stocks or money market securities.

• Corporate bonds are very less marketable than the securities which encompass higher daily trading volumes.

• The prices in corporate bond market as well tend to be more volatile than securities sold in markets with higher trading volumes.

• The market for corporate bonds is not as proficient as that for stocks sold on the main stock exchanges or highly marketable money market instruments like U.S. Treasury securities.

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