Global Bond Market Weightings By Country  

       A couple of decades ago, it made sense to just invest in the United States. The US produced more than half of the world’s output and the dollar was very strong. In addition, the manufacturing sector was booming and most importantly, the rest of the world was way behind the US. However, this approach is no longer viable.

       The global financial market is booming with Asia and Europe seeing new highs everyday. The global bond market is gaining and each country has its own bond market weightings. The entire global bond market weighting by country is quite diverse but primarily the international bond market is divided into three groups:

  1. Domestic bonds are those which are issued by domestic borrowers and these bonds are in the local currency of that particular country.
  2. Foreign bonds refer to bonds which are issued in a local market by foreign borrower and the buying process takes place in the local currency. Foreign bonds are under the supervision of local capital market authorities.
  3. Eurobonds are underwritten by multinational group of banks are usually issued in countries other than the country in whose currency the bond is denominated. However, these bonds are not traded in any special national bond market.

      Most financial institutes calculate and publish yield-to-maturity of various bonds. However, different methods are used in different countries and at times it is impossible to compare yields of different bonds globally.

       The US and the UK financial institutes publish actuarial yield on semiannual basis. However, most European financial institutes calculate an annual actuarial yield using the formula recommended by AIBD. This makes the calculation very accurate.

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Global Bond Market Weightings By Country




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