If we were of a more cynical bent, we would read the joint declaration as a sophisticated extortion list. Indeed, our view remains that there can be no real progress toward maintaining peace on the peninsula and freeing Koreans living in Kim Jong Il's terrible regime until Kim Jong Il no longer calls the shots. It was that authorities will soon unveil plans to liberalize the corporate bond market, allowing for the expansion of a more stable source of financing than bank lending. One reason for the severity of the financial crisis was the dearth of funding through bonds. When bank rates soared, many companies were forced to default on their debt.
Bonds offer the stability of fixed rates.
Laws have been amended to make the Securities Commission the sole regulator of corporate bonds, beginning July 1. The commission will require companies planning to issue bonds to provide more financial disclosure, which will spur investor interest since the more information investors have, the better they can judge risk. Next, authorities want to encourage more long-dated government paper to create a benchmark against which companies can price their own bonds. In addition, the commission reportedly is planning measures that would help create a more liquid secondary market. This is crucial.