The global financial crisis taught us many things, not least that the world has a voracious appetite for debt. Governments, firms, and individuals took on a sea of debt – many ultimately drowned in it, while some clung on thanks to unprecedented rescue operations.
Bonds are just one form of debt, but a crucial one. Largely shunned in the past by the mainstream media, which focused more on equity markets, the crisis catapulted fixed income markets onto the front pages. But while the ordinary person may not have known about the influence of debt markets on the global economy, the financial community was already well aware. Bonds have long been a critical source of finance for governments, corporations, and other borrowers. And the source of these borrowed funds is institutional and individual investors who are attracted to bonds for their huge array of risk and reward profiles.
It's no surprise, then, that the global debt securities market is vast, estimated at around USD 100 trillion in terms of debt outstanding (nearly double that of global stock market capitalization). The scale and influence of the fixed income market are beyond dispute.
