Present evidence of the growth in the importance of non-government bond issues over the past five years (to2005). Explain how mortgage backed securities are issued. Present evidence of the main issuers of these securities and explain the main reasons they issue these bonds. Describe the main forms of bonds issued by (non-financial) companies (excluding hybrids) and on the basis of evidence of the amounts issued assess the size of this segment of the bond market. Explain the use of 'credit wrapping' of the corporate bonds.
In Australia, the non-government bond plays an important part in the bond market. It includes the Asset-backed securities bond, financials bond, non-financial corporates bond and non-residents bond. In the last few years, there was a large proportion of issuer of securities in the bond market. In this essay, it will explain the questions that showed the above one by one.
Non-financial corporations, non-residents, asset-backed security and financials are the four main forms of the non-government bond.
A non-financial corporation security is a way for the lower-rated corporations raising funds directly from bond market rather through intermediate in the inshore and offshore markets. Non-residents securities issuers are foreigner's issuers, such as the governments of other countries. The purpose of issuing asset-backed securities is converting the illiquid assets, for example, the housing loans, which is to a tradable asset from domestic and offshore market. The financial securities are issued from financial institution in Australia.
From shape 1 that is showed the above, it is the contrast of Non-government bond, the Australian government bond and the State government bond. Comparing to the Australian government bond and the State government bond, the Non-government bond changed more obviously in the last 16 years. From 1990 to 1998, the Non-government bond maintained the status around 25 billion.