finance presentaiton - bond

8/13/2019 Finance Presentaiton - Bond

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NEPALESE DEBTMARKETSandesh Bhusal, Rashmi Lamsal, SachitaGhimire, Seekha Rai, Saujanya Acharya


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Bond Market?


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Bond Market

Bonds are the long term debt obligations issued

by corporation and government units.

Proceeds from bond issue are used to raise

funds to support long term operations of the

issuer (e.g. for capital expenditure projects).


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Bond Market

In return for investors fund, bond issuers

promise to pay a specified amount in the future

on the maturity of the bond (face value) plus

coupon interest on the borrowed funds.

Bond markets are the markets in which bonds

are issued and traded.


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Prospect of Nepalese Bond

Market


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Market

Reduce their borrowing cost, contain financial

risk, and develop their domestic debt market.

Leads to overall macroeconomic policy

framework which safeguards stability and isfavorable to growth.


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Market

More than 65% of domestic debt has

maturities of one year or shorter, and less than

9% of domestic debt has maturities of 10 years

or longer. The bulk of the cheap foreign loans have

maturities of longer than 30 years and account

for more than 57% of the financing of the

budget deficits in Nepal.


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Can go for less reliance on the foreign loans

from the developmental agencies

Korean Case

Less foreign debt


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Problems of Nepalese Bond

Market

There is a fluctuation in interest rate in bond in

Nepalese market which is one of the reasons

behind the investors distaste to invest in

bonds. To attract investors to the bond market,

interest in bond should be stable.


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Market

Treasury bill market is a major component of

money market in Nepal, started in the year

1961-62.

But, because of low yield and absence ofactive secondary market with brokers, it

remained mostly at the hand of the central

bank.


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Market

Lack of coordination with the International

Market.

It would be easier to access the funds in the

international market. Brokers specialized in the Bond Trading.

High transaction costs.

Lack of liquidity. Lack of Awareness.


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Why trading of bond is low in Nepal


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Issues in bond market in Nepal

Both the government and corporate bond are

issued in Nepalese bond market.

Financial market in Nepal is dominated by

bank and financial institutions.

The bond market itself is not well developed in

terms of both transaction in secondary market

and capital market size covered by the bondmarket.

Almost all the corporate issuers are from

banking sectors.


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The corporate bond participation is small in

size in size as compared to government bond

The corporate bond market only represents

approximately 20 percent of the total bondmarket capitalization.

The government bonds are also not available

in the stock exchange.

finance presentaiton - bond

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