But it should create opportunities in the high grade corporate bond market in the meantime.
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For one, liquidity remains strong in the corporate bond market, as spreads in both high yield and high grade corporates have remained relatively tight.
Indeed, the lack of an Asian corporate bond market is so troublesome that the advantages of a better benchmark may outweigh the Miyazawa subsidies.
Other projects in the pipeline: an exchange for small and medium enterprises, which will be an Indian version of London's Alternative Investment Market, and a corporate bond market.
Most of these bonds are denominated in dollars, as despite the introduction of the single currency the US corporate bond market is far bigger than the market in Europe.
According to International Financing Review, U.S. and international companies continued to take advantage of a stronger tone in the corporate bond market on Monday, with a number of deals expected to price later in the session.
The apocalyptic tax consequence of being a passive investor in small business loans stops virtually all foreign investors from participating directly in the U.S. small business loan market while driving their investment dollars into the corporate bond market.
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For all those reasons, the market for municipal funds is roughly 0.2 percent of the corporate bond market, and less developed than those in emerging economies like South Africa and the Philippines, claimed Nagarajan Narasimhan, senior director of CRISIL Ratings.
Despite the rather dour comments from Lockhart, the tide appears to be shifting in the corporate bond market as liquidity has begun to return and both investment-grade and high-yield premiums over Treasury yields have begun to narrow in recent sessions.
In a liquid market, corporate bond ETF market prices are held close to their NAVs by an arbitrage mechanism.
For example, India's stunted corporate-bond market might grow if banks and insurance firms were free to buy more corporate debt and less government paper.
With all this money flooding out of investment trusts, the corporate-bond market nearly collapsed.
Nor do I think a proper corporate-bond market will develop for a very long time.
The corporate-bond market was open but illiquid, with most bonds weakening against Treasurys.
Michael Hartnett, an economist at Merrill Lynch, thinks that the effects on the corporate-bond market would be particularly severe.
Although this still pales beside America's corporate-bond market, it grew by 235% last year, even though global issuance fell.
The corporate-bond market has become less active partly because of the government's massive extension of credit to troubled borrowers.
Regulation is only one reason why the corporate-bond market has remained so small.
Nor has a thriving corporate-bond market emerged to take over from the banks.
The corporate-bond market has virtually ceased to function since July 1999, when Daewoo collapsed under the weight of huge debts.
Volatility is likely to increase when the Fed raises interest rates again, or if the stockmarket plunges as the corporate-bond market has.
Until recently, Japan's tiny corporate-bond market seemed to be working more smoothly.
Indeed, there are good reasons for thinking that America's sophisticated corporate-bond market may be what saves its firms from the fate of their Japanese counterparts.
Overall, then, it does appear that a corner has been turned, and that the turning point came soon after spreads in the corporate-bond market peaked.
Like other Myanmar companies, though, it has limited access to capital under Myanmar's antiquated financial system, which lacks a corporate-bond market or a major stock exchange.
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America's attractions are obvious: its stockmarket has a bigger capitalisation than Japan's, Britain's and Germany's combined, and its corporate-bond market accounts for two-thirds of the world total.
Some bondholders believe China won't let any borrower in the corporate-bond market default, even borrowers that aren't government-owned, because officials want to ensure the market continues to operate smoothly.
Since the cut, according to Martin Fridson of Merrill Lynch, the corporate-bond market has reopened for better-quality borrowers, though it is not yet clear whether money is available for those who most need it.
American Electric Power (AEP) chose to delay its plans to build a wind farm in Indiana when the heavily indebted utility found its cost of capital had soared because of turmoil in the corporate-bond market.
That means he is looking for opportunities in the corporate-bond market, especially as many companies have strengthened their balance-sheets in recent years, and also at bonds issued by emerging-market governments, many of which have lower debt-to-GDP ratios than their counterparts in the developed world.
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