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RESERVE BANK OF AUSTRALIA

Research Discussion Paper – December 2012

A History of Australian Corporate Bonds

Susan Black, Joshua Kirkwood, Alan Rai and Thomas Williams

RDP2012-09

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Abstract:

This paper examines the development of Australian corporate bond issuance since the early 20th century, based on a new unit-record dataset that we have compiled. Issuance trends have changed significantly over the past century as bond markets have become more diverse, sophisticated and globally integrated.

A number of changes over the past century are discussed: (i) today, issuance is largely by private entities whereas it was dominated by government-owned corporations historically; (ii) the issuer base has shifted from being mostly non-financial corporations towards banks; (iii) a wide range of entities are now able to tap the bond market; (iv) Australian corporations now raise a large share of funds offshore; and (v) the investor base has shifted away from direct holdings by households towards indirect holdings through superannuation/managed funds and holdings by non-residents.

These developments have largely been due to: the evolution of the structure of the Australian economy; privatisations; and changes in the regulatory landscape, particularly the deregulation of the banking system in the 1980s, and the floating of the exchange rate and abolition of capital controls in 1983.