Types of Bonds
The corporate bond market sector is second largest after the sovereign government bond sector. Nearly 30% of outstanding bonds in the global market are corporate bonds, according to Merrill Lynch.
In Europe the corporate bond markets continue to grow and develop although recent market volatility has slowed growth.
Individual investors are less involved directly in the corporate bond market in Europe than in the US. At this time, more individual European investors invest in corporate bond funds and other collective investment vehicles than individual corporate bonds. Research on how some individual Europeans invest in bonds suggests that because most individual investment in bonds has heretofore been in the government bond markets, there is a need for investors to familiarise themselves with concepts of risk which relate to investments in corporate bond debt. The assessment of credit quality of corporate bond issuers is particularly important; investors, who may have only invested in government bonds previously, may need to strengthen their understanding of how credit quality and risk affects corporate bond investments.