A more active Australian corporate bond market could enhance investment and venture capital

THE House of Representatives Standing Committee on Tax and Revenue has today (Monday) presented its report titled The Development of the Australian Corporate Bond Market: A Way Forward.

Corporate bonds are a type of debt security, issued by entities to finance their business operations. In its report, the committee makes 12 recommendations to support the development of a more active corporate bond market in Australia.  

The committee’s recommendations aim to remove barriers to the issuing of corporate bonds as well as raise awareness about the benefits of corporate bonds, both for investors and issuers. Specifically, the committee’s recommendations include ensuring that investors have access to timely and useful information about corporate bonds, lowering the minimum investment parcel to $1,000 for corporate bonds, to improve accessibility to more investors, reviewing the licensing regime for credit rating agencies to minimise access barriers, and streamlining disclosure requirements for the issuing of simple corporate bonds. 

The committee’s recommendations also include proposed amendments to the relevant regulations to allow for the early redemption of simple corporate bonds, as well as a review of Chapter 2L of the Corporations Act 2001 (Cth) with the aim of increasing the availability of trustees for the retail bond market.

Further, the committee recommends a review of the regulatory reforms implemented in New Zealand’s corporate bond market to further develop and make more liquid Australia’s corporate bond market.

Committee chair, Jason Falinski MP, advocated for regulatory changes in this space.

"It is the hope of this committee that the government will commence implementing recommendations as soon as possible as each recommendation will result in unleashing the considerable power of the corporate bond market in Australia," Mr Falinski said.

A full copy of the committee’s report can be found on the inquiry’s website.

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