Examining the US Corporate Bond Market and the Changing Environment for Japan's Corporate Bond Market

After the financial crisis deepened from September 2008, large US corporations temporarily had difficulty getting funding, but conditions have gradually improved since the beginning of 2009, in step with growth in corporate bond issuance. In the US, although nonperforming loans have hampered the ability of banks and other financial institutions to provide credit, this has only had a limited impact on corporate fund procurement. This is because large US corporations fund the majority of their debt with corporate bonds rather than with bank loans, and there is a diverse investor base willing to invest in those corporate bonds, including overseas investors, mutual funds, and households. In this paper, we look at signs of growth in Japan's corporate bond market, first by examining the important role played by corporate bonds within US capital markets, and then by surveying changes in the environment surrounding Japan's corporates market.