Swiss Finance: Capital Markets, Banking, and the Swiss Value Chain

CHAPTER 7

Swiss Debt Markets

INTRODUCTION

Switzerland's position as a leading international financial center is not an accident. Its debt markets offer a variety of advantages to both investors and borrowers. Debt instruments denominated in Swiss francs are attractive to investors due to the portfolio diversification opportunities they offer to global portfolios seeking a safe, stable, noneuro currency. Switzerland also offers investors important structural benefits, such as sharp pricing and a favorable regulatory environment. In addition, borrowers benefit from Switzerland's relatively liquid markets, especially for long-term debt instruments, as well as the nation's political stability, high domestic saving rate, substantial placing power, low inflation, open capital markets, lack of exchange controls, reasonably priced legal system, and reputation as a safe haven. The Swiss debt market has long been a safe retreat for domestic and international investors—especially during times of turmoil. Its noteworthy resilience during the 2007–2009 financial crisis is just the most recent example of this market's built-to-last quality. Relative to other developed nations, there was no significant credit crunch in either the Swiss debt or credit markets.1

Even though the growth rate of Switzerland's debt market has been slow compared to international competitors, it distinguishes itself by having a nonpublic borrowers' market that is larger than the public borrowers' segment and also a ...