Australian Government Legislates to Encourage Retail Corporate Bond Offerings
Australia’s deputy prime minister and treasurer, Wayne Swan, and minister for financial services and superannuation, Bill Shorten, have introduced legislation to further encourage the development of the country’s retail corporate bond market.
The government said that promoting a deep and liquid retail corporate bond market is a key component of its banking reform agenda and the Corporations Amendments (Simple Corporate Bonds and Other Measures) Bill would cut red tape for businesses issuing simple corporate bonds, making it easier to buy and sell these financial products.
It added that a vibrant retail corporate bond market would put competitive pressure on Australian bank lending rates to business and allow harnessing of national superannuation savings, enabling domestic funding of more productive investment in the Australian economy and reduce its reliance on offshore wholesale funding markets.
The legislation amends the Corporations Act to:
The legislation, according to a statement issued, represents “another major milestone in the government’s commitment to secure the long-term safety and sustainability of the Australian financial system”.
Prime minister Julia Gillard’s government is “committed to securing the long-term safety and sustainability of [Australia’s] financial system and boosting its reputation as one of the most attractive investment destinations in the world”. The latest move follows the passage of legislation last year to enable the retail trading of CGSs which provide a benchmark price for small investors looking to diversify their savings through investments in these corporate bonds.