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the various STOCK EXCHANGES list bonds, the principal markets for bonds
U.S. Government, federal agency, international and foreign, state and
municipal, and corporate are the over-the-counter-markets, with markets
made and trading carried on by bond houses tending to specialize in trading
as well as underwriting in one or more of these sectors.
Commercial banks of larger size are also found in this field as
bank dealers, underwriting and trading U.S. Government and general obligation
state and municipal securities.
bond market is predominantly institutional, with commercial banks particularly
heavy investors in state and local government issues.
above trends reflect the restriction of savings institutions largely to
the bond market by statutes and administrative regulations and, on the
other hand, their low motivation because of light taxability to invest
in state and municipal issues, which are exempt (as to their interest
income) from the federal income tax.
Commercial banks, however, are subject to federal income taxes,
and thus have found the tax exempts to be attractive in recent years in
view of higher volume of time and savings deposits and the higher interest
rates paid on such deposits.
contrast, pension funds, investment companies, and individuals in recent
years have shown relatively light increases in ownership of straight bonds,
reflecting their investing preferences for convertible bonds and debentures
and for common stocks directly.
Bond Ratings: An Overview.
& Poor's Corporation,