Corporate bond as an important tool of financing
A well-developed bond market can serve as a key source of financing for institutions in a country. It connects issuers like corporates, governments, local and municipal bodies, etc., with the investors like banks, insurance, pension funds, etc. For instance, the government bond market is an important financing source for the government. Moreover, government bonds provide benchmark yield curves which is a “public good” as most other debt instruments are priced against the government securities. Hence, a well-functioning and deep bond market can serve dual purposes of connecting issuers with prospective investors, while also contributing to an efficient price discovery mechanism.
March 21, 2023