Bonds were generally coming to the market because the cost of borrowing debt for companies had increased and the availability of commercial paper had dried up.
"They can't borrow as easily as they could in the past. They are going directly to the investing public."
The majority of the bonds in New Zealand were senior bonds, ranking alongside bank debt and having the same level of security as bank debt.
Dairy company Fonterra's bonds were ranked at the same level as bank debt and the Auckland City Council bonds were secured against the rate take of the council, he said.
The "vast majority" of bond issues ABN had participated in were rated by Standard and Poor's and although everyone made up their own minds, the ratings provided guidance for investors.
Everybody was taking more care, time and effort in considering the issues that came to the market.
However, it was important to not fill portfolios with bonds with five-year terms, or ending up with a mass of maturities arriving when interest rates could be down, Mr Timms said.
"The current bond market compared to two years ago and the debentures offered by finance companies are like chalk and cheese. You can't compare them or their ability to meet interest payments or repay capital."
Although the largest amount of bonds should be in secure ones like Auckland City Council or New Zealand Post bonds, and smaller amounts in ones like Contact Energy, no investor should put a huge amount into one particular issue.
Some term deposits were government guaranteed, but they were paying a low interest rate.
"People out there require income to live from and you can't eat the government guarantee. A term deposit paying 2.4% does not generate sufficient money to put food on the table in a lot of cases."
In the past few years a lot of money had been placed with banks. As that rolled off, it gave investors an opportunity to diversify into high quality companies which had not been in the market previously because of easy access to commercial capital.
High quality, smaller issues were generating huge demand and giving investors new names in their portfolios, Mr Timms said.
