Credit Market

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A Credit Market is a capital market where market participants trade credit market instruments (tradable debt securities).



References

2018

2015

2014

  • (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/bond_market Retrieved:2014-6-22.
    • The bond market (also debt market or credit market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on. The primary goal of the bond market is to provide a mechanism for long term funding of public and private expenditures. Traditionally, the bond market was largely dominated by the United States, but today the US is about 44% of the market. [1] As of 2009, the size of the worldwide bond market (total debt outstanding) is an estimated $82.2 trillion,[2] of which the size of the outstanding U.S. bond market debt was 31.2 trillion according to Bank for International Settlements (BIS), or alternatively $35.2 trillion as of Q2 2011 according to Securities Industry and Financial Markets Association (SIFMA). Nearly all of the $822 billion average daily trading volume in the U.S. bond market[3] takes place between broker-dealers and large institutions in a decentralized, over-the-counter (OTC) market. However, a small number of bonds, primarily corporate, are listed on exchanges.

      An important part of the bond market is the government bond market, because of its size and liquidity. Government bonds are often used to compare other bonds to measure credit risk. Because of the inverse relationship between bond valuation and interest rates, the bond market is often used to indicate changes in interest rates or the shape of the yield curve. The yield curve is the measure of "cost of funding".

  1. http://www.investinginbondseurope.org/Pages/LearnAboutBonds.aspx?folder_id=464
  2. Outstanding World Bond Market Debt from the Bank for International Settlements via Asset Allocation Advisor. Original BIS data as of March 31, 2009; Asset Allocation Advisor compilation as of November 15, 2009. Accessed January 7, 2010.
  3. Avg Daily Trading Volume SIFMA 2009 Jan-Nov Average Daily Trading Volume. Accessed January 6, 2010.

2020

  • (Wikipedia, 2020) ⇒ https://en.wikipedia.org/wiki/bond_market Retrieved:2020-3-31.
    • The bond market (also debt market or credit market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on.

      Its primary goal is to provide long-term funding for public and private expenditures. The bond market has largely been dominated by the United States, which accounts for about 39% of the market. As of 2017, the size of the worldwide bond market (total debt outstanding) is estimated at $100.13 trillion, according to Securities Industry and Financial Markets Association (SIFMA). [1] The bond market is part of the credit market, with bank loans forming the other main component. The global credit market in aggregate is about 3 times the size of the global equity market. Bank loans are not securities under the Securities and Exchange Act, but bonds typically are and are therefore more highly regulated. Bonds are typically not secured by collateral (although they can be), and are sold in relatively small denominations of around $1,000 to $10,000. Unlike bank loans, bonds may be held by retail investors. Bonds are more frequently traded than loans, although not as often as equity. Nearly all of the average daily trading in the U.S. bond market takes place between broker-dealers and large institutions in a decentralized over-the-counter (OTC) market.[2] However, a small number of bonds, primarily corporate ones, are listed on exchanges. Bond trading prices and volumes are reported on Financial Industry Regulatory Authority's (FINRA) Trade Reporting and Compliance Engine, or TRACE.

      An important part of the bond market is the government bond market, because of its size and liquidity. Government bonds are often used to compare other bonds to measure credit risk. Because of the inverse relationship between bond valuation and interest rates (or yields), the bond market is often used to indicate changes in interest rates or the shape of the yield curve, the measure of "cost of funding". The yield on government bonds in low risk countries such as the United States or Germany is thought to indicate a risk-free rate of default. Other bonds denominated in the same currencies (U.S. Dollars or Euros) will typically have higher yields, in large part because other borrowers are more likely than the U.S. or German Central Governments to default, and the losses to investors in the case of default are expected to be higher. The primary way to default is to not pay in full or not pay on time.

  1. https://www.sifma.org/wp-content/uploads/2017/08/US-Fact-Book-2018-SIFMA.pdf
  2. Avg Daily Trading Volume SIFMA 1996 - 2016 Average Daily Trading Volume. Accessed April 15, 2016.