The UK corporate bond market

Quarterly Bulletin 1981 Q1
Published on 01 March 1981

This article, the third in a series of explanatory articles designed for the general reader, considers why there have been so few issues of corporate bonds in the last seven years, discusses the implications for monetary policy, and assesses the prospects for a revival in the bond market.

Uncertain prospects for inflation and interest rates have made companies reluctant to raise long-term fixed-interest funds at prevailing interest rates. Meanwhile, alternative sources of medium-term and long-term finance have developed, particularly through the banking system. Nevertheless, there is a latent demand for long-term loan finance on appropriate terms, and any revival in the corporate bond market can be expected to have beneficial effects on the operation of monetary policy.

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