Corporate bond markets in a time of unconventional monetary policy published by OECD (2019).
“Since the financial crisis in 2008, non-financial companies have dramatically increased their borrowing in the form of corporate bonds. Between 2008-2018 global corporate bond issuance averaged USD 1.7 trillion per year, compared to an annual average of USD 864 billion during the years leading up to the financial crisis. As a result, the global outstanding debt in the form of corporate bonds issued by non-financial companies reached almost USD 13 trillion at the end of 2018. This is twice the amount in real terms that was outstanding in 2008.
The United States remains the largest market for corporate bonds. But non-financial companies from most other economies, including Japan, the United Kingdom, France and Korea, have all increased their use of corporate bonds as a means of borrowing. On a global scale, the most significant shift has been the rapid growth of the Chinese corporate bond market. The People’s Republic of China (China) has moved from a negligible level of issuance prior to the 2008 crisis to a record issuance amount of USD 590 billion in 2016, ranking second highest in the world.
The increased use of corporate bonds has been supported by regulatory initiatives in many economies aiming at stimulating the use of corporate bonds as a viable source of long term funding for non-financial companies and an attractive asset class for investors. The increase in bond usage is also consistent with the objectives of expansionary monetary policy and the related unconventional measures by major central banks in the form of quantitative easing. Given the elevated risks and vulnerabilities associated with the current outstanding stock of corporate bonds that is documented in this paper, it is therefore important to understand how and to what extent today’s corporate bond markets may be influenced by different economic and public policy scenarios…”
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