‘EFFECT OF MACROECONOMIC FACTORS ON CORPORATE BOND MARKET OF PAKISTAN’

Abstract

This paper examines how major macroeconomic announcements such as CPI, policy rate, fiscal deficit and GDP growth rate affect the spread in the corporate bond market of Pakistan; an underdeveloped market having asymmetrical information. The paper compares the performance of the numerous TFCs issued over the past five years with these factors. In isolation, none of these factors has a major impact on the bond return (spread) but considered cumulatively each has a significant impact in altering the returns.