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            During the past three decades, Hong Kong has emerged as an international financial centre. However, unlike many major international financial centres, debt market in Hong Kong is particularly underdeveloped. In 1995 the World Bank even estimated that Hong Kong's bond market was the second smallest in non-Japan Asia. Despite much pride people in Hong Kong have taken for their development and status in the finance sector, the Asian Financial Crisis in 1997 revealed to them the shortfalls of their system and the enormous price behind the underdeveloped debt market. These days, increasing attention is given to the debt market. HKSAR government has also launched a wide range of initiatives to foster such development. .
             Before looking at different aspects of expansion of the debt market, one question should be thought carefully, Why do we need a debt market? The following figures which are quoted from 1995 World Bank study can give a rough idea about the situation, .
             rapid economic growth v/s forecast to be 7.7% per annum between 1994 and 2004.
             high savings rates of over 30%.
             huge amount of investment required to sustain the rapid growth, estimated to be around US$8 trillion between 1994 and 2004.
             increasing reliance on debt financing to meet investment needs, from 9% of gross domestic fixed investment in 1994 to 26% in 2000-2004.
             The figures show the growing affluence and high saving rate of people. At the same time, there is a trend showing larger part of the community's savings being handled by professionals who are likely to go for a more diversified investment portfolio. On the other hand, many large-scale investment projects will start in the near future, e.g. the Disneyland and the Cyber port, all of them need great pools of fund to support. It is obvious that debt market can bridge the gap between the growing affluence and the investment projects.
             In this paper, the future prospects of Hong Kong Debt Market would be analyzed by studying the market background, historical and current constraints in demand and supply, new opportunities and effectiveness of recent initiatives.


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