"WE OWE IT TO OURSELVES" - AUSTRALIA AND CORPORATE BONDS: IOU 2 WE OWE US

[Page under construction, but here are my preliminary thoughts]

This could well be, as George Megalogenis asserts, 'Australia's Moment'.

But we have got to give Oz credit, or make that debt..

The domestic corporate bond market is still under-developed.

With super funds hammered - and largely stagnant in equities - now is the time, say critics, to look at stronger local issuance.

Cf NAB TRU Energy and Murray Goulburn offerings.

Low corporate debt levels. Although our banks are more highly geared qua banking , still have hefty balance sheets through record profits. Nevertheless, the cost of foreign debt has clearly risen, and Europe's woes will only slowly abate. 10-yr Australian bond rate low and we have a sustainable level of government debt with unique terms of trade.

Australian corporates are financially responsible, well-managed and expanding into APAC, even in face of recent downgrades. Eg, BHP. SMEs should also be able to source capital via either private placement or bond issuance if IPOs are down.

I looked for corporate bonds as an investment class but was told by a representative at a major bank that bonds were 1) unavailable or 2) available, only in prohibitive tranches of $100K or more.

As several authors contend, should thus extend corporate debt investment to retail investors.

After all, return on equity and property not going very far at the moment. Little certainty in market.

Time for Australia to enter new economic phase: deepening in debt market.

Have corporate finance, underwriting and structuring expertise. But borkers are 'broken'. Time to look for stronger paradigm, better model? And look to demand..

As Mark Eggleton observes, regulatory and cultural/systemic hurdles to growing corporate bond pool.

Only 1% of Super Funds invested in bonds.

NAB corporate debt, however, returns 2.75% over the benchmark rate.

Extend to SMEs + EDUCATION according to Rick Sawers.

BASEL III

Means we have got to get our game on..

Reduced leverage
Risk mitigation
Diversified out of equities and listless cash

Busting of credit Super-Bubble

Echoed by Will Farrant at Credit Suisse.

Whatever past investor predilection, corporate bonds could offer entry point for Gen Y investors looking for stable, attractive returns.

Feasible entrance into market? Less speculative.