Dramatic Increase In Bond Trading Volumes, Assets Under Management - Survey

Total cash bond trading volume (excluding short-term instruments) increased by more than 30% in 2002 to $10 trillion, while total fixed-income assets under management rose more than 50% to $9.2 trillion, according to a spring 2002 study of the U.S. institutional bond market by Greenwich Associates. The survey reported continued market concentration, with the largest 10% of investors generating 80% of the trading volume. As a proportion of the total, volume increased in investment-grade credit bonds (17% to 20%) and declined in government bonds (30% to 26%), while volume in short-term instruments was essentially unchanged at $14 trillion. Fixed-income investors continue to express a preference for specialist coverage; in general, the less liquid the product, the greater the demand for specialist sales coverage. More than 70% of investors in high-yield, distressed, emerging market, and syndicated loan products prefer specialist coverage, while fewer than 35% of investors in treasuries, agencies, and short-term products do so.

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