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Introduction

A well-developed financial system should not only have a sound banking system but also have a robust corporate bond market. High-yield bond market is a very important part of a mature corporate bond market.
This segment acts as complementary to equity and bank finance and it is particularly beneficial for economies with large number of small and medium enterprises like India. This below Investment grade bonds are beneficial for the following reasons:

Literature Review - Development of High-Yield Bond Market in US and EURO-Area

United States was the pioneer in the creation of the high-yield segment of the corporate bond market in the early 1980s and viewed as a major financial innovation in the fixed income segment over the last decades. It was set in motion to facilitate the financing of highly leveraged or start-up companies that were unable to borrow on flexible conditions.

It has flourished in the last two decades - has seen its peak in the late 1980s started declining in the early 1990s but somewhat stabilized in the mid of 1990s. Despite the September' 11 terrorist attack, this market has displayed impressive resilience and is currently contributing a fair share of US bond market.

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* Contributed by: -
Jayanta Das & Kartavya Soni,
ICFAI Business School, Hyderabad.