However, as highlighted by the statistics discussed earlier, New Zealand’s domestic corporate bond market has been relatively stagnant since the early 1990s, and remains small in relative and absolute size. This market also remains relatively illiquid, with private placements often preferred and low turnover in the secondary market.
The situation could be summarised as too few willing institutional investors on one side of the market, and too few quality issuers on the other side. One constraint on investor demand for access to corporate debt has been the shape of New Zealand’s interest rate yield curve, with the highest returns to investors often being seen at the shorter-end of the lending spectrum.