Demand for private sector securities waned in the midst of the crisis in response to a general reduction in risk-taking, although that weakness in demand really has only been persistent in the case of asset-backed securities. Supply was also affected by regulatory requirements that sought to place banks on a sounder footing and reduce their exposure to wholesale markets.
How important is the private bond market compared with alternative sources of finance? Currently, the value of private bonds outstanding is around $ trillion. This includes issuance by financial and non-financial corporations. That stock is equivalent to around two-thirds of the value of companies on the Australian stock exchange. So the bond market is an important source of finance.