Major Bond Markets

The major capital markets where a company can raise funds through the issue of bonds are:

• US capital market
• Euro bond market
• Japanese bond market and
• Medium term notes market

1. US Capital Market

US Capital market is the largest and most liquid capital market in this world. This enables companies to borrow larger amount of funds at fixed interest rates with longer maturities. The U.S debt market is predominantly comprised of large insurance companies, pension funds, fund managers, and credit corporations. With the historical low interest rates in US as compared to Asian countries US institutional investors have become more receptive towards Asian issuers/emerging market economies in order to increase their yield on investment. There are three ways for an issuer company to raise funds in US capital market.

• Private placement market
• The rule 144-A market (Quasi Public Market) and
• The Vankee bond market (Public market).

2. Euro Bond Market

Euro bond market is another major source of foreign capita through the issue of debt instruments. Recent years have shown tremendous growth in the Euro bond market due to low interest rates which has attracted fixed income investors to look beyond traditional investment grade credit to lower quality credit in order to enhance yield.

3. Japanese Bond Market

There has been a significant growth in the Japanese Bond Market due to attractive interest rates on yens. Companies may consider issue of Samurai Bond in Japanese bond Market in order to diversify the investor‘s base. However, growth of the Samurai market is limited due to appreciation of Yen as compared to other currencies.

4. Medium Term Notes Market

Medium Term Notes (MTNs) are debt instrument offered on a continuous basis in a broad range of maturity primarily through lead managers/managers. MTNs provide issuers with more flexibility then straight Euro bonds by allotting them to access subject to market demand, the international capital market on a continuous basis with multiple issues of varying face amounts and tenors.