The financial crisis in Japan in 1997 caused changes in the corporate bond market. Investors became more cautious, leading to higher risk premiums and price volatility. Credit ratings were downgraded, and banks tightened their lending policies. This made it harder for dealers to trade bonds in the secondary market. However, the primary market for bond issuance remained strong, with companies needing funds due to stricter bank lending. The difference in performance between the primary and secondary markets shows that market structures can affect price discovery functions. The widening credit spread between corporate and government bonds attracted new investors to the primary market.