Researchers from the Australian Centre for Financial Studies (ACFS) have prepared a report on behalf of the National Australia Bank (NAB), which is aimed at retail and wholesale investors looking to access the corporate bond market.
While the number of corporate bond issues open to retail investors has increased over the past five years – aided by the growth of exchange traded funds and other investment vehicles – there are still a number of impediments to access debt securities and corporate bonds, the report states.
“At the time of writing, the number of corporate bonds available for direct investment is limited,” said the report.
“However, a number of government and industry initiatives are being undertaken to increase the size, liquidity and participation in the Australian corporate bond market in the future.
“It is expected that as a result of this desire to develop the Australian corporate bond market, corporate bonds will progressively become more accessible to retail investors.”
The report also makes the case for fixed income investment for retirement phase investors, stating that while returns may be lower than those on equities, they are lower risk and therefore less likely to result in a “disastrous outcome for retirement savings”.
In commissioning the report, NAB executive general manager, debt markets, Steve Lambert said the banking group was committed to accessibility in the corporate bond market.
“We have been advocating for the development of a deeper and more liquid retail bond market, which would benefit corporates, businesses, investors and the broader economy,” Mr Lambert said.
“For corporates, a deep and liquid corporate bond market will broaden funding sources and help facilitate growth. For investors, a fully functioning retail corporate bond market offers more choice and an opportunity to diversify investments,” he added.
The report is the third in a collaborative series by NAB and the ACFS.
