Author(s): Shafiqul Hassan, Md. Anowar Hossain Bhuiyan, Md. Abud Darda, Md. Belal Hossain, Md. Wahidul Habib
Development of Bond Market is pre-requisite not only for development of capital market, but also for development of economy of any country. Unfortunately, the size and maturity level of bond market of Bangladesh is much debased compared to other neighboring countries of South Asia. The objective of this study is to make an investigation of the challenges, opportunities and related issues of bond market in Bangladesh and also make a critical analysis of policy initiatives of bond market development. The study is based on secondary data obtained from various sources. The study revealed that the corporate bond market of Bangladesh is still very small and the dominating role of banking sector in corporate finance is inevitable. Interest rates on government bonds are repressed and government yield curve is not able to highlight the actual level of risk free rates in the economy, inflation scenarios and other macroeconomic circumstances. It is also revealed that Islamic bond issued for shorter tenures to promote domestic Islamic financial institutions. Bangladesh government should initiate necessary regulations so that the foreign and domestic investors feel encouraged for more investment in bond market. Bangladesh bank should regularly publish the reports on bond market including the information on debt securities and money market.