The UK corporate bond market was strong and growing in 2023 and 2024.
Read Occasional Paper 67 (PDF)[1]
Summary
This paper assesses the liquidity of the UK corporate bond market using updated MiFID II transaction data and methodology from Occasional Paper 14[2]. It aims to understand current liquidity levels and market trends.
As part of its 2025–2030 strategy[3], the FCA set out its regulatory priorities for the next five years, including a commitment to support growth, by ensuring the continued competitiveness of our world leading financial services. The corporate bond market plays a crucial role in economic growth, financial stability, and investor confidence by providing businesses with access to funding.
Between 2018 and 2024, the UK market experienced major events, including Brexit, the COVID-19 pandemic, and rising inflation and interest rates.
We tested four hypotheses on the UK corporate bond market to examine how it performed during this turbulent period and identify any emerging trends that may affect the functioning of the market.
Despite challenges, findings suggest the market remained resilient and recovered strongly. There is no evidence of sustained deterioration in pricing, capital allocation, or trading volumes. By 2024, liquidity remained high, yield spreads were low, and both market volume and corporate bond issuance increased in 2023 and 2024.
Authors
Justus Laugwitz, Khashayar Rahimi, Robert Baker
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