Corporate bond market a long-term project
(14 December 2011 — Australia) The development of a large corporate bond market in Australia may not happen over-night, but Treasurer Wayne Swan told a roundtable in Sydney that the Gillard Government is committed to working with industry to build the market up.
The roundtable was held in the offices of investment bank Credit Suisse with a range of bond industry figures and regulators to discuss growth options for the domestic fixed interest market.
The meeting coincided with Swan’s release of a discussion paper outlining a range of measures aimed at developing a deep and liquid retail corporate bond market.
In a bid to cut some of the red tape that raises the cost of issuing bonds, the discussion paper suggested the government allow companies to issue shorter prospectus documents when selling bonds.
The paper also proposes watering down director liability laws, saying today's rules require extensive oversight of bond issues by directors, raising their cost.
In addition, the government reaffirmed its commitment to allowing retail investors to buy and trade Commonwealth Government bonds on a stock exchange, similar to the way they already trade equities.
This is widely regarded as an important step to spur on issues of corporate bonds to retail investors.
'Creating a large and liquid corporate bond market is a long-term project with no quick fixes, but the Government is committed to work with the industry to encourage the development of this important market over time,' Swan said.
''The government considers the development of a deeper and more liquid corporate bond market an important issue for the broader development of our financial sector and more importantly our economy,'' Swan said.
''This is increasingly important at a time when international debt markets are facing such difficult headwinds.''
The meeting coincided with Swan’s release of a discussion paper outlining a range of measures aimed at developing a deep and liquid retail corporate bond market.
In a bid to cut some of the red tape that raises the cost of issuing bonds, the discussion paper suggested the government allow companies to issue shorter prospectus documents when selling bonds.
The paper also proposes watering down director liability laws, saying today's rules require extensive oversight of bond issues by directors, raising their cost.
In addition, the government reaffirmed its commitment to allowing retail investors to buy and trade Commonwealth Government bonds on a stock exchange, similar to the way they already trade equities.
This is widely regarded as an important step to spur on issues of corporate bonds to retail investors.
'Creating a large and liquid corporate bond market is a long-term project with no quick fixes, but the Government is committed to work with the industry to encourage the development of this important market over time,' Swan said.
''The government considers the development of a deeper and more liquid corporate bond market an important issue for the broader development of our financial sector and more importantly our economy,'' Swan said.
''This is increasingly important at a time when international debt markets are facing such difficult headwinds.''
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