Slowly but surely a junk bond market is emerging in Australia. At a time when the failings of the wholesale corporate bond market continue to be enunciated by many and the listed corporate bond market gives the impression of being stillborn for issuers outside of the banking sector, the emergence of a junk bond market was unexpected, to say the least.Despite this, ASX listed companies outside of the top 200 are finding that there is a group of sophisticated investors with a keen appetite for high yielding, unlisted and unrated bonds.These are investors that are not beholden to asset consultants and investment mandates that prohibit investment in corporate bonds that are not investment grade. They are also investors that are, for the most part, buy-and-hold investors, and therefore not concerned about secondary market liquidity for the bonds that they purchase.And they are investors with an appetite for risk, if the yield is high enough.Clearly, the catalyst for the emergence of a junk bond market is interest rates that are at record lows, and which the Reserve Bank of Australia has signalled are set to remain low for some time. This is a problem for many middle market investors that rely on income from their investment portfolios to at least partially fund their operations.Think of, for example, schools, hospitals, churches, charities, and universities.Indeed, many private foundations (those established as private ancillary funds) are compelled to distribute at least five percent of their net assets every year. If private ancillary funds cannot earn 5 per cent per annum from their investments, their capital base will be eroded and their ability to fund charitable works will steadily diminish.Many private ancillary funds are run out of family offices. The skill sets that reside within family offices may allow the credit risk of junk bond issuers to be accurately assessed.The same is not necessarily true for other investors in this sector. Nevertheless, awareness has steadily grown among originators of the fixed income needs of these middle market investors, as they are referred too.FIIG Securities pioneered the sector and to date has originated seven high yield bond issues, raising A$360 million in the process. Its first unlisted and unrated bond issue targeted at middle market investors was a $30 million, six year bond from Silver Chef, yielding 8.5 per cent per annum.Other originators have emerged in recent months.Evans & Partners placed A$50 of five year FRNs among its client base, for the litigation funder, Bentham IMF, in April. The FRNs pay 420 basis points over the bank bill rate.In mid-May, Wilson HTM finalised a A$30 million, four year bond placement for Money3 Corporation. The bonds, which will pay a coupon of 9 per cent per annum, were placed in two A$15 million tranches, with holders of the second tranche also receiving options over equity in the issuer.On Monday, NAB made its entrance into the sector with a five year bond issue from NEXTDC. The issue was launched at A$30 million but such was demand from NAB's