Profile of the Global Bond Market

 Size of the Global Bond Market

in $U.S. Billions of Current Dollars, September, 1998

 Bonds, along with stocks, retained earnings, and loans constitute the basic means of finance. While governments rely extensively on bond markets to finance current and capital operations, so too do private firms use bonds in making financing decisions. The choice of which financial instrument to use depends on a number of considerations, including the tax treatment of interest, the prevailing rate of inflation, and the opportunity cost of capital. Data in the table below reflect the relative importance of bond markets to government, corporate, and other borrowing institutions. The United States accounted for the largest single country bond market as of the end of 1997, due largely to both the size of the U.S. economy as well as to the historical consequences of significant and largely unbroken federal government deficits from 1969 to 1998 when the government moved into a surplus position.

Government Corporate Other Foreign Eurobond Total
United States 6663.2 2955.8 382.6 1216.2 11217.8
Japan 2821.1 905.7 88.5 358.6 4173.9
Germany 1202.4 1113.2 298.8 329 2943.4
Italy 938.3 220.2 5 107.6 1271.1
France 650.2 134.3 4.8 171.8 961.1
United Kingdom 524.2 60.2 7.6 263.8 855.8
Canada 388.2 69.2 0.6 0.3 66 524.3
Netherlands 233.7 18.7 1.3 88.5 342.2
Belgium 202.7 97.8 32.6 5.8 338.9
Denmark 90.4 164.9 11 266.3
Spain 194.4 23.7 19.7 6 243.8
Switzerland 44.9 76.1 10.7 95.7 13.3 240.7
Sweden 102.8 93.4 4.3 200.5
Austria 61 68.4 1.8 2.7 133.9
Australia 79.7 13.6 39 132.3
ECU 83.5 27.1 17.7 128.3
Finland 40.6 12.4 0.4 2.5 55.9
Norway 27.7 22 1 50.7
Ireland 24.9 1.8 1.8 28.5
New Zealand 12.6 8.8 21.4
Iceland 3.2 0.9 4.1
Total 14389.7 5900.9 207.5 939.1 2697.7 24134.9

Source: Merrill Lynch, Size and Structure of the World Bond Market: 1998, September 1998, p. 5

Last updated: 2/7/99

Phillip LeBel

e-mail: LeBelp@mail.montclair.edu