Abstract: This paper attempts to cover the overview of the bond market in Bangladesh, the importance of bond market in the country, major functional challenges the bond market faces, and suggestions & policy recommendations to meet the challenges. In the first section, an overview of the bond market in Bangladesh is given. This overview includes the types of bonds available in our country, their outstanding values, comparison between bond’s market cap and stock’s market cap, and the investor base for debt instruments. Next section of this report focuses on the importance of bond market in Bangladesh. The government of Bangladesh aims to achieve the status of middle-income country by 2021 and high-income country by 2041. In this journey, a well-developed bond market will be highly beneficial. In addition to that major functional challenges that the bond market of Bangladesh faces, have been identified. These challenges include easy access to bank loan, preference for bank savings, domination of treasury securities, absence of global credit rating agencies, lack of knowledge on debt securities, and non-existent yield curve. Finally, we formulate several recommendations and discuss few policies to meet the challenges. We focus on awareness creation for the investors, issuance of bonds by state owned enterprises, incorporation of investment grade bond into SLR, reduction of cost and time of bond issuance, limitation of yield on govt. securities, welcoming global credit rating agencies, formulation of polices to attract non-resident Bangladeshis, establishment of bond index, mandatory disclosure of information by issuer, and promoting securitization.
S. M. Raihan Uddin & S. M. Rifat Hassan (2022). Bond Market in Bangladesh: An Exploratory Study. Southeast Business Review: Southeast University, 12(1&2), 117—130. ISSN: 1815-3267.
