Domestic Bond Markets

	Table of Contents
p. 12 of 13 BACK | NEXT Cover Page Introduction Executive Summary Chapter 1: Government Policies Chapter 2: Regulatory Framework Chapter 3: Market Infrastructure Chapter 4: Liquidity Chapter 5: Risk Management Working Papers Workshop Participants Appendix 1: Introduction Appendix 1: Executive Summary Appendix 1: Findings and Recommendations

Appendix 1: Executive Summary

1. This Report consists of five sections. Detailed responses to the survey from APEC member economies are listed in the annexes in Part IV of this Report.

2. The first section gives an overview on the sizes of bond markets and the types of bonds issued. According to the figures provided by member economies, the total bond market capitalization of APEC was about US$16.3 trillion as at end-1997. It was noted that almost all of the 16 APEC member economies' debt markets have experienced steady growth in the past three years. However, in US$ terms, the bond market capitalization of the crisis-hit economies had contracted in 1997 due to the sharp depreciation of their currencies against the US dollar.

3. The second section discusses market infrastructure issues. It was found that the secondary markets for most APEC bond markets are under-developed. Moreover, securities clearing and custody systems need to be enhanced. Some economies are still issuing bearer bonds. On the other hand, nine APEC economies have already implemented Real Time Gross Settlement Systems, and another three economies indicated that they would implement RTGS in 1999 and 2000.

4. The third section looks at supply and demand of Asian bonds. Currently, bonds are mostly issued by the public sector, mainly governments. However, it was observed that the dominance of the public sector as bond issuers had shifted to the private sector recently in Australia and Malaysia, as government bond issues decreased over the years. Only eight member economies have issued bonds denominated in foreign currencies, but the amounts of the issues are small relative to bonds denominated in local currencies.

5. The fourth section discusses the yield curves in member countries. Most member countries have benchmark yield curves. However, some curves are not reliable, as secondary trading is limited. Member countries are aware of the importance of benchmark yield curves in promoting market developments. Accordingly, they are considering issuing government bonds on a regular basis to ensure the reliability and the accuracy of the curve.

6. The fifth section discusses the regulatory framework and the legal system protecting bond investors. Most economies have some form of legislation to protect the investors in case of default of bond issuers.

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