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90年初美国市场推出的公司债券。那时公司债券的销售员用自行车出售债券.。当时大多数债券可在每个和二级5%债券。公司从市场募集资金只卖100债券。
30年代公司债券收益率从4.5%下降至2.25%。根据Brad Hickman的精彩的企业债券的研究，1900年到1943年之间，面值710亿美元的美国企业债券出售，其中18%拖欠，12%是到期全额支付的，只有26%坚持到期。这些数据似乎揭示了曾经是企业债券市场主体的私人投资者失去了他们债券持有的四分之三的过程：默认情况下，按电话，到期。
由于悲观投资者远离公司债券市场。主要原因是电话，违约，下降和低溢价率。在此期间，金融机构用来购买所有新发行的小额债券，也购买了其他机构和私人投资者压低价格出售的经验丰富的问题，因此他们迅速成长起来.。
An Introduction 简介
In early 90’s Corporate Bond introduced in American market. In those days Salesman of Corporate Bonds use to sell Bonds through bicycle. That time most of Bonds were available at per and were second grade 5 percent bond. Companies use to sell only 100 bonds to collect money from market.
In 1930s prime corporate bond yield declined from 4.5 to 2.25 percent. According to Brad Hickman's wonderful corporate bond studies, between 1900 and 1943, $71 billion par value of straight bonds of American corporations were sold, of which 18 percent defaulted, 12 percent were paid in full at maturity, 37 percent were called, and 26 percent were outstanding at the end. These figures seem to reveal the processes by which private investors, once the mainstay of the corporate bond market, lost three-quarters of their bond holdings: by default, by call, and by maturity.
Due to depression investors go away from corporate bond market. The main reason was for the calls, defaults , declines and low premium rates. During this period financial institutes use to buy all the small issues of new bonds also bought seasoned issues that were being sold at depressed prices by other institutions and private investors, so they grew up rapidly.
At that time competitive bidding for new issues became common, and institutions experimented with bidding, often to their sorrow. There were also a few "best efforts" new issues. The corporate bond business became almost wholly an institutional business in the 1 930s. Often the dealers bought blocks of bonds at deeply depressed prices from deposit institutions that were forced by examiners to liquidate, and the dealers then sold the bonds to strong life insurance companies. In those days, although most large corporate bond issues were still listed, block transactions in high-grade bonds were mainly over the counter while low-priced, active, speculative bonds traded partly on the exchange and partly over the counter. The exchange tried hard to retain its bond business by means of a series of regulations requiring members to trade smaller lots on the exchange, or at least try to, but those efforts did not affect trades in large lots and without the public the small-lot business dried up, and the large-lot business came to dominate the market. In the worst part of the depression a great deal of round-lot bond business was done with institutions on an order basis without involving dealer capital, that is to say, a liquidating institution would give a dealer a firm order to sell a block of inactive bonds at a price higher than was obtainable from dealer bids, and the dealer would check his institutional customers in an effort to find a buyer and often succeeded.
In between 1940s and 1960s corporate bond markets were almost institutional affairs. Private investors ignored high-grade corporate bonds, and speculators concentrated on governments, where they often fared poorly. New-issue underwriting at times reached massive volume. Secondary markets were often active, but almost entirely in round lots because the buyers and sellers both were institutions . It was usually very hard to buy or sell small on or off the board. Usually Private placements became common.
The market of Corporate bond boomed between World War I and World War II for the first time. Studies revelled that the U.S. government kept bondyieldsartificially low during World War II for inflation till 1951. It was not until these restrictions were lifted that the bond market began to reflect the new inflationary environment. The long-termU.S.bond yields was as low as 1.9 parcent in 1951 that climbed to a high of nearly 15 parcent by 1981. This was the turning point for second bull Bond market.
The United States suffered very little disruption to its stock market during the world wars that many of the European and Asian markets experienced. As per the studies, the American economy largely benefited from the wars successful companies like General Motors, Ford and IBM thrived as a result. At the same time, all other economies suffered great losses. According to Phillipe Jorion and William N. Goetzmann in their article "Global Stock Markets In The Twentieth Century" (1999), “the Japanese stock market saw a 95% decline in real returns between 1944 and 1949. The German market also suffered devastating losses. In this context, the success of American market seems to be an exception, which the previous lack of data for other countries may have obscured”.
Private and miscellaneous investors' net purchases of corporate bonds rose from $2 billion in 1968 to $7 billion in 1969 and to $10 billion 1970. This was the time, since Institutional and miscellaneous investors had invested $6 billion to $10 billion a year net into corporate bonds, which represents about one third of the net new issues of corporate bonds.
During the period of 1970 - 2000 corporate bond market grown rapidly in USA. In 1969 institutions either ran out of funds or concentrated on equities in which experience had excellent. When bond yields soared from 6 percent to 9.35 percent, private and miscellaneous investors returned to the bond market in size, at times taking almost half the total offered. Those ware days of disintermediation. As a result the bond market became investors choice. After rally of a few years the market again declined to a new low levels. Yields rose higher than ever, and private investors were again very active byers.
The graphs below show a breakdown of the world markets in both 1900 and 2000 and the anomalous growth of theU.S.market during this time.
Features – Details of Instrument traded
The American corporate bond market is enormous. Outstanding principal in corporate bonds at the end of 2006 was $5.37 trillion, which was larger than both municipal bond and American Treasury, still it was not as large as mortgage bonds. Corporate bonds are a principal source of external financing for American firms, new corporate bond issues during 2006 amounted to $470 billion, up from $222 billion a 1997. During this decade, American corporations issued a total of $4.6 trillion in corporate bonds, compared to $1.5 trillion raised by public common stock offerings.
We can segregate American Corporate Bonds in four ways, i.e. duration, rate, security, and credit quality. Different types of Corporate bonds are given below :
Duration
Commercial Paper
Short Term ( 2 to 5 Years )
Intermediate ( 5 to 12 Years )
Long Term ( Above 12 Years )
Rate
Straight Coupon
Zero Coupon
Floating Rate
Security
Mortgage Bond
Collateral Trust
Equipment Certificate
Debenture
Subordinated Debenture
Credit Quality
Investment Grade
Junk or High Yield
Story Bond
Fallen Angels
Restructuring / LBO’s
Principal Players
By Principal Players we mean those which provide investors with a regular, sizable and stable supply of high quality and uniform bonds through public offerings. They may be termed “impatient traders” with a high demand for immediacy. They issue their bonds almost on a regular basis, say, every week, month, or quarter, so that the investors can reasonably anticipate when the bonds will be available for sale. Their issue timing is basically cyclical and somewhat indifferent to ever-changing market conditions to meet their continuous funding needs. They are not opportunistic. Under normal circumstances, their issue size is large enough to meet a substantial part of investment demand across the market, and their issues are relatively consistent in size. They are financially strong and competently manage their business operations, meaning investors have a great deal of trust in their ability to pay the interests and principal on their bonds in a timely manner.
Such strength and trustworthiness allows them a “Triple-A” or otherwise high grade from one or more private rating agencies. Their issues include many of identical or similar maturity or structure, for instance, unsecured, fixed-rate, straight 3-, 5- or 10-year bonds. Ideally, some of them should be made fungible by reopening outstanding issues at consecutive auctions. As a result, major corporate bonds will be widely held in the market, and they are likely to be actively traded on the secondary market.
Suitable candidates for major corporate issuers are infrastructure and utility companies and development finance companies. Such enterprises tend to have a regular, sizable and stable demand for long-term funds. Properly structured and operated, they can therefore provide investors with a regular, sizable and stable supply of uniform and high-quality bonds through public offerings.#p#分页标题#e#
Infrastructure and utility companies include companies engaged in power generation and distribution, transportation (roads, railways, airlines, sea and airport facilities), telecommunications, water supply, and sanitation. Out of these, power and telecommunications companies are most likely candidates as major corporate issuers.
Infrastructure and utility companies’ operations are highly capital intensive and usually involve a large degree of financial leverage. And they are large, meaning that even if a financing round is sliced into a series of staggered bond issues, each is likely to be sizable. Since their funding demand is massive and continuous, they will tap the market on a regular basis. They generally cannot afford to be too opportunistic in terms of issue timing. Their funding needs range from short-term to long-term, while the investments in
their production facilities are of a long-term nature. Their credit quality is generally high, because they are usually oligopolistic if not monopolistic.
Development finance companies are by definition financial intermediaries specializing in long-term finance, primarily for industrial development. Compared with infrastructure and utility companies and housing finance companies, they are perhaps easier to shape into major corporate issuers.
High credit quality of their bond issues derives from commercial prudence in their lending operations. Few of them are given below:
AETNA INC
ALCOA INC
ALTRIA GROUP INC
AMERICAN EXPRESS CREDIT CORP
AMERICAN ENENERGY GENERATING CO
AMERICAN INTL GROUP INC
AMERICAN TOWER CORP
ANADARKO PETROLEUM CORP
ARCELOR MITTAL
AT&T INC
AVON PRODS INC
BALL CORP
BANK OF AMERICA CORP
BANK OF NEW YORK
BANK OF NOVA SCOTIA
BARCLAYS BK PLC
BECTON DICKINSON
BERKSHIRE HATHAWAY
BP CAPITAL MARKETS PLC
BRITISH TELECOMMUNICATIONS PLC
CABLEVISION SYSTEMS CORP
CATERPILLAR FINANCIAL INC
CBS CORP
CHEVRON CORP
CITIGROUP INC
CLIFFS NATURAL RESOURCES INC
COCA COLA
COLUMBIA HLTH
CONOCO PHILLIPS
CVS CAREMARK CORP
DAVITA INC
DEVON ENERGY CORPORATION
DOW CHEMICAL CO
ECOPETROL SA
EMERSON ELECTRIC CO
ENERGY TRANSFER PARTNERS
ENTERPRISE PRODUCTS OPERATING
FORD MOTOR
GE CAPITAL
GEORGIA POWER COMPANY
GLAXOSMITHKLINE CAPITAL
GOLDMAN SACHS GROUP INC
HCA INC
HEWLETT-PACKARD
HSBC
IBM CORP
J P MORGAN
JC PENNEY
JOHN DEERE CAPITAL CORP
JOHNSON & JOHNSON
KINDER MORGAN ENERGY PARTNERS
MACYS RETAIL HLDGS INC.
MEDTRONIC INC.
MERCK & CO INC
MERRILL LYNCH & CO INC
METLIFE INC
MORGAN STANLEY
NOBLE HOLDING INTL LTD
ORACLE CORP
PACIFIC GAS & ELECTRIC
PEPSICO INC
PFIZER INC
PHILIP MORRIS INTL INC
PROCTER & GAMBLE CO
PRUDENTIAL FINANCIAL INC
RIO TINTO FINANCE (USA) LIMITED
SOUTHERN CALIFORNIA EDISON
TIME WARNER
UNION PACIFIC CORP
UNITEDHEALTH GROUP INC
VERIZON COMMUNICATIONS
WAL-MART STORES
WALT DISNEY COMPANY
WELLS FARGO
Regulatory framework ( governing ) & Changes in last 10 years
The regulator of USA Corporate Bond is Security and Exchange Commission (SEC). The regulatory agency was formed in 1934 by Congress during the Great Depression to protect investors from fraud and to maintain fair, and efficient markets to facilitate capital formation.
The basic motto of SEC to increase public security and reducing fraud by mandatory disclosure of information about the issuer. SEC also publish investment related topics for investor education. It also take complains from investors to track the violators of Federal Securities Law.
The SEC can take actions against the companies, who commits fraud by providing false statement or violates U.S.A Securities Law. It also enforces the statutory requirement thatcompaniessubmit quarterly andannual reports, as well as other periodic reports. These reports are very important to the investors to make decision while investing in capital market. It is responsible for regulating credit ratings agencies.
The SEC establish financial law in the country through seven major acts governing the financial industry, including recently added, theSarbanes-Oxley Act of 2002 and theCredit Rating Agency Reform Act of 2006.
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