A South African Corporate Bond Market

Abstract

ABSTRACTThis paper explores the attitude of major players in the capital markets to the question of why there is virtually no corporate bond market in South Africa. Information was sought as to whether investors ought to be provided with a broader range of risk instruments; what criteria investors seek in a corporate bond market; whether these overlap with the criteria important to potential debt issuers, and what hurdles restrict the development of such a market.Information was elicited through the medium of a mailed questionnaire sent to a sample of listed companies. Included were all life assurers and banks, together with the larger pension funds, investment companies and merchant banks.It was found that the attitudes of South African financial managers were generally positive towards the issuing of corporate bonds. Enough potential issuers with appropriate attributes existed. High inflation was seen as a critical stumbling block impeding formation of such a market. Needed too were market makers and th...