Disclaimer
BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.
What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:
who holds an Australian Financial Services License
who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)
that is a body regulated by APRA other than a trustee of:
(i) a superannuation fund;
(ii) an approved deposit fund;
(iii) a pooled superannuation trust; or
(iv) a public sector superannuation scheme.
within the meaning of the Superannuation Industry (Supervision) Act 1993that is a body registered under the Financial Corporations Act 1974.
that is a trustee of:
(i) a superannuation fund; or
(ii) an approved deposit fund; or
(iii) a pooled superannuation trust; or
(iv) a public sector superannuation scheme
within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.that is a listed entity or a related body corporate of a listed entity
that is an exempt public authority
that is a body corporate, or an unincorporated body, that:
(i) carries on a business of investment in financial products, interests in land or other investments; and
(ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.
Fixed income
Credit markets
The credit market is the mechanism through which new debt can be issued or in which existing debt can be traded. As the bond market represents the dominant portion of the credit market, the terms ‘bond market’, ‘debt market’ and ‘credit market’ are often used interchangeably.
Credit markets and equity markets make up the capital market. The credit market represents the largest portion: the size of the global bond market is estimated at USD 102.8 trillion,** compared with the global equity market capitalization of USD 74.7 trillion.**
Issuance in the primary market
Issuance of new debt takes place in the primary market, as a means for governments, government agencies and companies to raise capital. In buying these debt instruments, investors lend money to the issuers in exchange for the promise of repayment of the loan value – or face value, or par value – at a specified future date – the maturity date. Depending on how the debt agreement is structured, the buyer may be entitled to a regular payment, referred to as the coupon.
Pricing of debt
The pricing of debt instruments is based largely on the creditworthiness of the issuing entity: if the market has doubts about the ability of a government or a business to meet its debt service and repayment obligations, it would demand a higher compensation for buying and holding the debt.
General market sentiment, currency risk, political risk, changes in policy interest rates, regulatory changes that change the business environment, amongst other factors, would influence this assessment of creditworthiness.
A long history of innovation
Credit valuation
In credit markets, valuation is reflected in the yield on the debt instrument, which is the ratio of the annual coupon payment to the market price of the bond. Should the price of a debt instrument trade lower owing to the view that it has become riskier, the yield on the debt instrument rises (see bond spread).
Credit market activity is a barometer of sentiment and thus of likely future economic and market trends.
Footnote:
** SIFMA estimates for 2018, measured as total outstanding debt (September 2019)
