Jamal Abbas Zaidi, CEO
Islamic International Rating Agency
It is well known that the debt markets consist of government and agency bonds, corporate bonds, municipal bonds, asset-backed securities and Islamic financial instruments. Participants in secondary debt markets include institutional investors, governments, traders and individuals; while the dominant players in the issuer’s market are sovereign and sub-sovereign bodies, the secondary market is usually dominated by banks and financial institutions.
Developed economies have efficient public debt markets where most primary offerings are sold. As indicated by its rating, an issuer’s financial strength and external support, define the credit strength and determine the pricing of an issue. The nature of sovereign debt means it is less risky than other forms. As a result, it normally sells at less attractive yields compared to non-sovereign debt.
In emerging capital markets, as in developed markets, the dominant role is normally played by the sovereign. The corporate debt instruments are also emerging on the scene.
