High-Yield Bond Liquidity Analysis in Emerging Markets

Today bond market is one of the most important segments of the financial sector, particularly in developing countries. Besides serving as an alternative source of attracting investment for companies, bond loans are also an effective investment tool. The concept of liquidity is crucial for the examination and detailed analysis of financial markets and, in particular, bond markets. Nevertheless, this measure remains one of the least studied. After a series of financial crises in the mid and late 90s. developing countries have become one of the driving forces of global economy progress. Inherent financial market development features of developing countries as well as their institutional characteristics may influence bond liquidity to a great extent. Taking this into account, research on bond liquidity beyond developing countries markets is relevant and of current interest. High-yield or “junk” bonds have hardly been studied due to their recent appearance on the market, as well as the skepticism in the scientific community towards their further development. Despite this, investors continue to use high-yield bonds as one of the most effective investment tools, which makes the research on the topic highly relevant.