Blog
A New Market for Bonds
2nd February 2010
A few weeks ago we waved on the issue of bonds and we think the corporate and sovereign bond markets could be the source of the big macroeconomic news stories during 2010. An interesting new development is the launch of Britain’s first retail bond market by the London Stock Exchange - an attempt to develop a wider base of investors prepared to put their money into bonds and perhaps (by offering an alternative to floating shares on the stock market) open up the supply of credit for smaller businesses.
According to Reuters, “Bonds are deemed safer than other forms of securities such as equities because interest payments are fixed and investors get their money back unless the company goes bust. But prior to maturity bonds’ value can vary and move inversely to their yield.” Just under fifty government and corporate bonds have been made available for trading as this new trading platform takes its first tentative steps. Here is a beginner’s guide to bonds from the Radio 4 Today programme.
In a related story figures show that Individuals in the UK own just 10% of the shares traded on the London Stock Exchange, down from 13% in 2006 and far lower than the 54% they owned in 1963. More here
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.