The ESX Fixed Income Market is a market where participants buy and sell debt securities, either directly from the issuer through the primary market, or afterwards through the secondary market following the initial debt security issuance. Fixed income securities represent a form of borrowing, with the issuer (which can be a government, corporation, or other entity) raising funds by selling securities such as bonds to investors. In return for purchasing these securities, investors receive periodic interest payments (often referred to as coupons) and the return of the instruments face value (principal) at maturity.
The ESX Fixed Income market will facilitate the listing, quoting, and trading of debt instruments with the aim to increase efficiency, transparency, and liquidity of the Ethiopian debt capital markets.
○ Provides an efficient platform for retail and institutional investors to access tradable debt instruments to actively manage investments over different economic cycles.
○ Improves the availability of long-term capital and provides a substitute for bank loans for companies, possibly helping lower their cost of capital.
○ A way for companies to access short-term finance to fund working capital needs through money market commercial paper instruments that can be quoted and traded on the secondary market in a relatively short period of time.
○ Provides a well-tested avenue for the public sector to finance long-term infrastructure investments using local currency debt financing.