I want to begin by giving overview of the Swedish bond market as a part of the global bond market. Generally speaking, overall size of the debt market of one currency can be estimated by the size of outstanding government bonds, because goverment bonds function as building blocks for other sectors such as corporate cash bonds, swaps etc. The size of the government bonds will, again roughly speaking, be proportional to the size of economy i.e. GDP and how much the government spending is financed by issuing debt.
Since Sweden has a pretty compact economy with low debt-to-income ratio currently running at 32% of GDP (EU average 70%), the government bond market is quite small relative to other major sectors. The graph below shows the breakdown of the global bond market based on the amount outstanding of investment grade indexed bonds as of the last march month end. The total amount of global bond market is standing at about $39 trillion, of which crona bonds is $230 million, about 1% of the total bond universe. Within the euro area the total market size is $12 trillion so that the crona bonds have 2% of market share.
As the number shows, it is not at all a big portion, but it is still a fairly well-functioning, fully fledged market, and offers a nice play-ground for people who engage in financial modeling. I'll talk more about it in the coming posts.
No comments:
Post a Comment