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Explain How Mortgage Backed Securities Are Issued. Present Evidence Of The Main Issuers Of These Securities And Explain The Main Reasons They Issue These Bonds.

948 words - 4 pages

Present evidence of the growth in the importance of non-government bond issues over the past five years (to2005). Explain how mortgage backed securities are issued. Present evidence of the main issuers of these securities and explain the main reasons they issue these bonds. Describe the main forms of bonds issued by (non-financial) companies (excluding hybrids) and on the basis of evidence of the amounts issued assess the size of this segment of the bond market. Explain the use of 'credit wrapping' of the corporate bonds.IntroductionIn Australia, the non-government bond plays an important part in the bond market. It includes the Asset-backed securities bond, financials bond, non-financial corporates bond and non-residents bond. In the last few years, there was a large proportion of issuer of securities in the bond market. In this essay, it will explain the questions that showed the above one by one.EssayNon-financial corporations, non-residents, asset-backed security and financials are the four main forms of the non-government bond. A non-financial corporation security is a way for the lower-rated corporations raising funds directly from bond market rather through intermediate in the inshore and offshore markets. Non-residents securities issuers are foreigner's issuers, such as the governments of other countries. The purpose of issuing asset-backed securities is converting the illiquid assets, for example, the housing loans, which is to a tradable asset from domestic and offshore market. The financial securities are issued from financial institution in Australia.Shape 1From shape 1 that is showed the above, it is the contrast of Non-government bond, the Australian government bond and the State government bond. Comparing to the Australian government bond and the State government bond, the Non-government bond changed more obviously in the last 16 years. From 1990 to 1998, the Non-government bond maintained the status around 25 billion. But there was a rapid increasing of Non-government bond from 1998 till 2006, which status increased from 25 billion to nearly 300 billion, this is nearly 12 times increasing than 1998. While the State government bond was around 50 billion, and Australian government bond had a peak in 1997, after that it was steady from 2002 to 2006. From the comparing, it can be found that non-government bond was more massive than the other two bonds in bond market.The reasons why the non-government bond raised so fast were because the corporation profit stimulated the fund demands and the under management fund of the households increased.Shape 2The Australian entities have issued asset-backed securities into the markets, the residential mortgage securitisation has brought a fast increase in the asset-backed securities market, in the last few years, the supply of securitised mortgages has grown faster than housing finance. The development has reflected some parts of the arrangement of mortgage markets, therefore securitisations...

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