ABMF 323 Money and Capital Market
Topic 3: Discuss in detail bonds as an investment instrument
Tutor: Mr. Lee an C!uan "roup #
Group Me Members
: On Ong Ka Kah Ki Kian
14WBD00969
: Hon Hon Zh Zhon ong g Yu
14WBD 4WBD04 0402 02
: !harran
14WBD049"#
: $g Wai% &im
14WBD00#62
: Ka Ka' Ke Kean Yao
14WBD 4WBD0" 0"0 06 6
: (hin Yin Yin Hong
14WBD0066
: )eng Yee &ing ing
14WBD 4WBD01 0141 416 6
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(.) *ntroduction 2.) Content 2*1 De+ini,ion 2*2 )-pes o+ bon.s 2*" Me,ho. o+ issuing bon.s 2*4 (hara/,eris,i/ o+ bon.s 2* )ra.ing o+ bon.s 2*6 .3an,ageDisa.3an,age o+ Bon.s 2*# Bon. ra,ing 3.) +ecommendation,opinion "*1Di++eren/e be,'een bon. mar5e,s,o/5 mar5e, "*2 Di++eren/e be,'een bon. an. .eben,ure "*" Opinion abou, 1MDB -.) Conclusion #.) arvard re/erences
1 2 " 4 4 6 # 9 10 111" 1" 14
(.)*ntroduction
)he +irs, ,hing ,ha, pops in,o mos, peop%es min. 'hen ,hin5 o+ in3es,ing are s,o/5 mar5e,s* +,er a%%7 s,o/5s are in,eres,ing* )he s'ings in ,he mar5e, are e8a mine. ,horough%- in ,he ne'spapers an. e3en /o3ere. b- %o/a% e3ening ne's/as,s* ssues o+ in3es,ors ob,aining grea, 'ea%,h in ,he s,o/5 mar5e, are /ommon* Bon.s7 on ,he o,her han.7 .on, ha3e ,he same se8 appea%* )he %ingo seems ar/ane an. /on+using ,o ,he a3erage person* Basi/a%%-7 bon.s are %iabi%i,ies 'hi/h is ,ra.e. 'here bon.ho%.ers are a/,ua%%- %en.ing mone- ,o issuers* 8amp%e o+ bon.ho%.ers are in3es,ors an. issuer are business +irms a%so 5no'n as borro'ers* Besi.es7 bon. are a%so re/ogni;e. as <+i8e. in/ome se/uri,ies sin/e pa-men,s are in +i8e. amoun,s* )hus7 ,he borro'er agrees ,o repa- a +i8e. amoun, o+ prin/ipa% a, a pre.e,ermine. ma,uri,- .a,e as 'e%% as a +i8e. amoun, o+ in,eres, +or a spe/i+ie. perio. o+ ,ime* =ur,hermore7 bon.s are mu/h more una,,ra/,i3e espe/ia%%- .uring raging bu%% mar5e,s7 'hen ,he- seem ,o o++er an insigni+i/an, re,urn /ompare. ,o s,o/5s* Ho'e3er a%% i, ,a5es is a bear mar5e, ,o remin. in3es,ors o+ ,he 3ir,ues o+ a bon.s sa+e,- an. s,abi%i,-* n +a/,7 i, ma5es sense +or man- in3es,ors ,o ha3e a, %eas, a par, o+ ,heir por,+o%io in3es,e. in bon.s*
2.)Content 2.(De/inition
Bon.s are %ong ,erm .eb,*, is a sourse o+ +inan/ing ,ha, has ma,uri,- o+ more ,han 1 -ear*, is a /api,a% mar5e,* You %oan -our mone- ,o a /ompan-7 a /i,-7 ,he go3ernmen, an. ,he- promise ,o pa- -ou ba/5 in +u%%7 'i,h regu%ar in,eres, pa-men,s* /i,- ma- se%% bon.s ,o raise mone- ,o bui%. a bri.ge7 'hi%e ,he +e.era% go3ernmen, issues bon.s ,o +inan/e i,s spira%ing .eb,s* Genera%%-7 a bon. is a promise ,o repa- ,he prin/ipa% a%ong 'i,h in,eres, >/oupons? on a spe/i+ie. .a,e >ma,uri,-?* !ome bon.s .o no, pa- in,eres,7 bu, a%% bon.s re@uire a repa-men, o+ prin/ipa%* When an in3es,or bu-s a bon.7 heAshe be/omes a /re.i,or o+ ,he issuer* Ho'e3er7 ,he bu-er .oes no, gain an- 5in. o+ o'nership righ,s ,o ,he issuer7 un%i5e in ,he /ase o+ e@ui,ies* On ,he han.7 a bon. ho%.er has a grea,er /%aim on an issuers in/ome ,han a shareho%.er in ,he /ase o+ +inan/ia% .is,ress >,his is ,rue +or a%% /re.i,ors?* Bon.s are o+,en .i3i.e. in,o .i++eren, /a,egories base. on ,a8 s,a,us7 /re.i, @ua%i,-7 issuer ,-pe7 ma,uri,- an. se/ure.Aunse/ure. >an. ,here are se3era% o,her 'a-s ,o /%assi+- bon.s as 'e%%?* )reasur- bon.s are genera%%- /onsi.ere. ,he sa+es, unse/ure. bon.s7 sin/e ,he possibi%i,- o+ ,he )reasur- .e+au%,ing on pa-men,s is a%mos, ;ero* )he -ie%. +rom a bon. is ma.e up o+ ,hree /omponen,s: /oupon in,eres,7 /api,a% gains an. in,eres, on in,eres, >i+ a bon. pa-s no /oupon in,eres,7 ,he on%- -ie%. 'i%% be /api,a% gains?* bon. migh, be so%. a, abo3e or be%o' par >,he amoun, pai. ou, a, ma,uri,-?7 bu, ,he mar5e, pri/e 'i%% approa/h par 3a%ue as ,he bon. approa/hes ma,uri,-* ris5ier bon. has ,o pro3i.e a higher pa-ou, ,o /ompensa,e +or ,ha, a..i,iona% ris5 * !ome bon.s are ,a8e8emp,7 an. ,hese are ,-pi/a%%- issue. b- muni/ipa%>no, a3ai%ab%e in Ma%a-sia?7 /oun,- or s,a,e go3ernmen,s7 'hose in,eres, pa-men,s are no, subCe/, ,o in/ome ,a87 an. some,imes a%so s,a,e or %o/a% in/ome ,a8*
2.2Types o/ Bonds in T!e Market
Ma%a-sia /on,ains man- ,-pes o+ bon.s 'hi/h is a/,i3e +or bo,h s%ami/ an. /on3en,iona% bon.s* =u,ure mar5e, /an a%so be a//ep,e. +or Ma%a-sian go3ernmen, se/uri,ies* 3er- bon.s in Ma%a-sia a%'a-s has ris5 bu, is 'he,her high or %o'* Go3ernmen, Bon. is a bon. issue. b- a na,iona% go3ernmen, .enomina,e. in ,he /oun,r-s o'n /urren/-*Go3ernmen, bon.s are usua%%- re+erre. ,o as ris5 +ree bon.s 'i,h ma,uri,- e8/ee.ing more ,han " -ears*=or e8amp%e7Ma%a-sian Go3ernmen, !e/uri,ies >MG!?7Kha;anah Bon. an. Bon !impanan Mer.e5a* One o+ ,he ,-pe is ,he s,raigh, bon.s 'hi/h is a%so /a%%e. go3ernmen, bon.s or /orpora,e bon.s* )here are /a%%e. p%ain 3ani%%as
2.3Met!ods o/ *ssuin0 Bonds
1*u/,ion u/,ion is un.er,a5en b- B$M +or go3ernmen, bon.s an. Erin/ipa% Dea%ers +or B$M no,es* a* u/,ion b- B$M B$M7 3ia /ompe,i,i3e au/,ion7 issues go3ernmen, bon.s on beha%+ o+ ,he go3ernmen,* !u//ess+u% bi..ers are .e,ermine. a//or.ing ,o ,he %o'es, -ie%.s o++ere.7 an. ,he /oupon ra,e is +i8e. a, ,he 'eigh,e. a3erage -ie%. o+ su//ess+u% bi.s* b* u/,ion b- Erin/ipa% Dea%ers Erin/ipa% Dea%ers o++er B$M no,es ,hrough /ompe,i,i3e au/,ion* 2* Dire/, E%a/emen, or )en.er Bon.s issue. b- o,her s,a,u,or- bo.ies an. go3ernmen,o'ne. /orpora,ions7 as 'e%% as /orpora,e bon.s7 are issue. 3ia .ire/, p%a/emen, or ,en.er*
2.-C!aracteristics o/ Bonds
$omina% a%ue>Ear a%ue? )he nomina% 3a%ue is ,he par or +a/e 3a%ue* %so 5no'n as ,he prin/ipa% 3a%ue 'hi/h is ,he amoun, ,ha, ,he issuer agree. ,o • •
repa- ,he bon.ho%.er a, ,he ma,uri,- .a,e* B (oupon a,e s ,he nomina% in,eres, ra,e ,ha, .e,ermines ,he a/,ua% in,eres, ,he bon.ho%.er •
re/ei3es on o'ning ,he bon.* Ea-ab%e annua%%-7 ha%+ -ear%-7 or @uar,er%-Iho'e3er7 ha%+ -ear%- is mos, popu%ar ( )erms ,o ma,uri,s ,he no* o+ -ears o3er 'hi/h ,he issuer o+ ,he bon. has promise. ,o mee, ,he •
•
• • •
/on.i,ions an. ob%iga,ion o+ ,he bon. issue* During ,his ,ime ,he bon.ho%.er is pai. ,he promise. /oupon pa-men, , a%so in.i/a,es ,he remaining %i+e o+ ,he bon. Ma,uri,- o+ ,he bon. is ,he .a,e ,he bon. 'i%% /ease ,o e8is,7 a, 'hi/h ,ime ,he
issuer 'i%% pa- ,o ,he bon.ho%.er7 ,he prin/ipa%* D Yie%.,oma,uri,s ,he in.i/a,e. >promise.?/ompoun.e. ra,e o+ re,urn an in3es,or 'i%% in3es,or •
'i%% re/ei3e +rom a bon. pur/hase a, ,he /urren, mar5e, pri/e an. he%. ,o ma,uri,-* s ,he e++e/,i3e in,eres, ra,e earne. on ,he bon. in3es,men,* Eri/es o+ bon.s are @uo,e. in re%a,ion ,o ,heir -ie%.* (a%% Ero3ision n,i,%es ,he issuer ,o ran.om or /a%% ,he bon.s +rom ,heir ho%.ers* n3es,ors 'i%% re/ei3e some /ompensa,ion +or ,he ris5 ,ha, ,he bon . 'i%% be /a%%e. • •
• •
•
a'a-* )he in3es,or 'i%% ,hen be subCe/,e. ,o rein3es,men, ris5*
=
!in5ing =un. Mone- pu, asi.e b- ,he issuer perio.i/a%%- +or ,he e3en,ua% repa-men, o+ ,he .eb,* nsures enough mone- ,o re.eem ,he bon. upon ma,uri,-* • •
2.#Tradin0 o/ Bonds
)he Ma%a-sian bon. mar5e, /onsis,s o+ %is,e. an. un%is,e. bon.s* Jn%is,e. bon.s are %arge%,ra.e. o3er ,he /oun,er >O)(? 'hi%e %is,e. bon.s are ,ra.e. ,hrough Bursa Ma%a-sia* O3er,he(oun,er Mar5e, )ra.ing n Ma%a-sias O)( mar5e,7 ,he primar- mar5e, segmen, is +a/i%i,a,e. b- Ban5 $egara Ma%a-sia >B$M? ,hrough ,he =u%%- u,oma,e. !-s,em +or ssuingA)en.ering >=!)?* , pro3i.es in+orma,ion on issue ,erms7 rea%,ime pri/es7 /omp%e,e. ,ra.e .e,ai%s7 an. o,her re%e3an, ne's abou, .eb, se/uri,ies* =!) 'as +irs, %aun/he. b- B$M in !ep,ember 1996 ,o au,oma,e ,he ,en.ering pro/e.ure o+ go3ernmen, se/uri,ies or Ban5 $egara Eapers7 'hi/h are issue. ,hrough ,he prin/ipa% .ea%er >ED? ne,'or5* n u%- 199#7 =!) 'as +ur,her enhan/e. ,o in/%u.e /ommer/ia% papers an. me.ium,erm no,es7 'hi/h are issue. 3ia ,en.er or pri3a,e p%a/emen,* n a..i,ion7 Bursa Ma%a-sia opera,es ,he %e/,roni/ )ra.ing E%a,+orm >)E?7 'hi/h +a/i%i,a,es ,he ,ra.ing an. repor,ing o+ se/on.ar- mar5e, a/,i3i,ies* )E a/,s as ,he /en,ra%i;e. pri/e an. ,ra.e reposi,or-7 an. in,er+a/es 'i,h =!) an. in+orma,ion 3en.ors* More in+orma,ion /an be ob,aine. ,hrough ,he Bursa Ma%a-sia 'ebsi,e* 8/hange ,ra.ing Bursa Ma%a-sia is an e8/hange ho%.ing /ompan- appro3e. un.er !e/* 1 o+ ,he (api,a% Mar5e,s an. !er3i/es /, 200# >(M!?* , opera,es a +u%%-in,egra,e. e8/hange7 o++ering a /omp%e,e range o+ e8/hangere%a,e. ser3i/es in/%u.ing ,ra.ing7 /%earing7 se,,%emen,7 an. .eposi,or- ser3i/es* )he 'ho%%-o'ne. subsi.iaries o+ Bursa Ma%a-sia o'n an. opera,e ,hese 3arious businesses*
&1amples o/ teps o/ Tradin0 Bonds
1* )he se%%er an. bu-er ,ra.e o3er ,he /oun,er b- ,e%ephone >.ire/, .ea%ing or ,hrough mone bro5er?* $ine,-+i3e per/en, o+ bon. ,ra.es are .ea%, in ,he O)( mar5e,* (ommer/ia% ban5s an. s%ami/ ban5s /an ,ra.e ,he bon.s* 2* %% ,ra.es are re/or.e. in ,he )E*
"* )he se%%er >or bu-er? inpu,s ,ra.e .a,a in,o ea%,ime %e/,roni/ )rans+er o+ =un.s an. !e/uri,ies >$)!? ,o ini,ia,e un/on+irme. se,,%emen, a.3i/e* 4* )he bu-er >or se%%er? /on+irms an un/on+irme. se,,%emen, a.3i/e using b- ,he (on+irma,ion menu o+ $)!* * )he se%%er an. bu-er a//ess ,he epor, menu o+ $)! an. /on+irm ,ha, /on+irma,ion o+ %o/a% ma,/hing is per+orme.* 6* #* On se,,%emen, .a,e7 bon. an. /ash are se,,%e. on DE basis* * )he se%%er an. bu-er a//ess epor, menu o+ $)! an. /on+irm repor, o+ Bon. se,,%emen, an. /ash se,,%emen,*
2.T!e advanta0es and disadvanta0es o/ Bonds To *ssuin0 Firm Advanta0es
L)a8 .e.u/,ion o+ in,eres, pa-men, (oupon pa-men,s ,o bon.ho%.ers are ,a8.e.u/,ib%e +or ,he issuing +irm
Ln/rease in earnings per share !in/e a bon. is a +i8e.in/ome se/uri,-7 ,he surp%us earnings a3ai%ab%e ,o shareho%.ers a+,er .e.u/,ing in,eres, pa-men, ,o bon.ho%.ers .uring in,eres, pa-men, ,o bon.ho%.ers .uring goo. ,imes 'ou%. be higher* LMain,ain /on,ro% o+ ,he +irm !in/e bon. ho%.er are /re.i,ors o+ ,he +irm7 ,he- .o no, ha3e /on,ro%%ing righ,s o3er ,he managemen, o+ ,he +irm as in ,he /ase o+ ,he +irm as in ,he /ase o+ ,he shareho%.ers* s su/h ,he shareho%.er o+ ,he +irm s,i%% main,ain /on,ro% o+ ,he +irm*
Disadvanta0es
LDeb, mus, be pai. )he +i8e. in,eres, /harge mus, be pai. 'he,her ,he +irm is ha3ing a goo. or a ba. -ear* =ai%ure ,o mee, ,hese pa-men,s ma- %ea. ,o ban5rup,/- sui,s b- ,he bon.ho%.ers* Ln/rease. ris5 .ue ,o +inan/ia% %e3erage Bon.s are /a,egori;e. as %ong,erm .eb,s an. ,he issuan/e o+ su/h se/uri,- 'ou%. in/rease. ,he +inan/ia% %e3erage o+ ,he +irm* Les,ri/,ions on issuing +irm )o pro,e/, ,hemse%3es7 bon.ho%.ers ma- p%a/e /er,ain res,ri/,ions or /o3enan,s on ,he issuing +irm ,o pre3en, i, +rom .e+au%,ing on i,s ob%iga,ions*
To investors Advanta0es
L=i8e. re,urns Bon.s are +i8e.in/ome se/uri,- an. in3es,ors 'ho pur/hase bon.s /an e8pe/, a s,ab%e re,urn sin/e ,he in,eres, pa-men, s +i8e.*
L&o'er ris5 )he bon.ho%.ers 'ou%. be ab%e ,o ha3e prior /%aims on ,he asse,s o+ ,he +irm be+ore ,he shareho%.ers in ,he asse,s o+ ,he +irm be+ore ,he shareho%.ers in ,he e3en, o+ %
[email protected],ion o+ ,he +irm* Disadvanta0es
L=i8e. in,eres, pa-men, + ,he issuing +irm has goo. earnings7 bon.ho%.ers .o no, ge, ,o enCo- ,he a..i,iona% earnings* LDe/%ine in rea% in,eres, pa-men, !in/e bon.ho%.ers ge, a +i8e. in,eres, pa-men,7 ,he- ma- %ose ou, .uring ,imes o+ high in+%a,ion* L&o'er re,urn Be/ause ,he ris5 is %o'7 ,he re,urns are ,oo Lein3es,men, ris5 on /a%%ab%e bon.s n,eres, ra,e a, 'hi/h ,he mone- re/ei3e. are rein3es,e. ma- no, be as high as e8pe/,e.* *
2.4Bond +atin0s
Bon. ra,ings are gra.es ,ha, are assigne. ,o bon. issues on ,he basis o+ e8,ensi3e7pro+essiona%%-*, is /on.u/,e. +inan/ia% ana%-sis ,o .esigna,e in3es,men, @ua%i,-*a,ings basi/a%%- poin, ,o ,he .e+au%, ris5 o+ an issue* Higher ra,ings mean ,ha, issues are in3es,men, gra.e*Besi.es7%o'er ra,ings mean ,ha, issues are in ,he Cun5 /a,egor- an. more spe/u%a,i3e*)he higher ,he ra,ing7,he %o'er ,he .e+au%, ris5 an.
hen/e7,he %o'er ,he -ie%. o+ an ob%iga,ion* %o'er ra,ing means ,ha, ,he in3es,or mus, assume more o+ ,he .e+au%, ris5 an. has ,o be /ompensa,e. 'i,h a higher -ie%.* "*0 +ecommendations 3.(Di//erence bet5een t!e bond market and t!e stock market )he simi%ari,ies o+ bon. an. s,o/5 are bo,h are se/uri,ies*
)he bon. mar5e, is 'here in3es,ors go ,o bu- an. se%% .eb, se/uri,ies7 prominen,%- bon.s* )he s,o/5 mar5e, is a p%a/e 'here in3es,ors go ,o bu- an. se%% e@ui,- se/uri,ies %i5e /ommon s,o/5s an. .eri3a,i3es >op,ions7 +u,ures e,/*?* !,o/5s are ,ra.e. on s,o/5 e8/hanges* n Ma%a-sia7 ,he mar5e, +or s,o/5 e8/hange is Bursa Ma%a-sia*n3es,ors in3es, in s,o/5 are h igher ris5 ,han in3es, in bon. mar5e,* When 'e bu- bon.s7 i, means 'e are borro'ing our mone- ,o ,he /orpora,ion* , is .eb, +or ,he /ompan- 'hi/h se%% bon.s* Whi%e s,o/5s are e@ui,-7 'hen 'e bu- s,o/5* , means 'e are bu-ing par, o+ ,he o'nership o+ ,he /ompan-* n +inan/e7 a bon. is a .eb, se/uri,-7 in 'hi/h ,he au,hori;e. issuer o'es ,he ho%.ers a .eb, an. is ob%ige. ,o repa- ,he prin/ipa% an. in,eres,* n +inan/ia% mar5e,s7 s,o/5 /api,a% raise. b- a /orpora,ion or Coin,s,o/5 /ompan- ,hrough ,he issuan/e an. .is,ribu,ion o+ shares* n bon.s mar5e,7 ,he- .o no, ha3e /en,ra%i;e. e8/hange or ,ra.ing s-s,em* !,o/5s ha3e /en,ra%i;e. e8/hange an. ,ra.ing s-s,em*!o7,his brings a.3an,ages ,o s,o/5 mar5e,*)his is be/ause in3es,or /an ,ra.e ,he s,o/5 /on3ien,%-* Bon.s are issue. b- pub%i/ se/,or au,hori,ies7 /re.i, ins,i,u,ions7 /ompanies an. suprana,iona% ins,i,u,ions* !,o/5 are issue. b- /orpora,ion or Coin,s,o/5 /ompanies* Deri3a,i3es o+ bon.s in/%u.es bon. op,ion7 /re.i, .eri3a,i3e7 /re.i, .e+au%, s'ap7 /o%%a,era%i;e. .eb, ob%iga,ion7 /o%%a,era%i;e. mor,gage *.eri3a,i3es o+ s,o/5s in/%u.es /re.i, .eri3a,i3e7 h-bri. se/uri,-7 op,ions7 +u,ures7 +or'ar.s7 s'aps* + ,here is an- ban5rup,/-7 bon.ho%.ers are pai. +irs, an. ,he %iabi%i,- ,o'ar.s .eben,ure ho%.ers is %ess* s m- re/ommen.a,ions7in3es,ors shou%. in3es, in in bon. mar5e, +or ,hose 'ho are ris5 a3erse*&o' ris5 means in3es,ors 'i%% ge, %o' re,urn*
3.2Di//erence bet5een bonds and debentures
Bo,h bon.s an. .eben,ures are ins,rumen,s a3ai%ab%e ,o a /ompan- ,o raise mone- +rom ,he pub%i/* )his is ,he simi%ari,- be,'een ,he ,'o7 bu, on /%oser inspe/,ion7 'e +in. ,ha, ,here are man- g%aring .i++eren/es be,'een ,he ,'o*
Bon.s are more se/ure ,han .eben,ures* s a .eben,ure ho%.er7 -ou pro3i.e unse/ure. %oan ,o ,he /ompan-* , /arries a higher ra,e o+ in,eres, as ,he /ompan- .oes n o, gi3e an- /o%%a,era% ,o -ou +or -our mone-* =or ,his reason bon. ho%.ers re/ei3e a %o'er ra,e o+ in,eres, bu, are more se/ure*+ ,here is an- ban5rup,/-7 bon.ho%.ers are pai. +irs, an. ,he %iabi%i,- ,o'ar.s .eben,ure ho%.ers is %ess* Deben,ure ho%.ers ge, perio.i/a% in,eres, on ,heir mone- an. upon /omp%e,ion o+ ,he ,erm ,he- ge, ,heir prin/ipa% amoun, ba/5* Bon.s are ,he mos, +re@uen,%- re+eren/e. ,-pe o+ .eb, ins,rumen,7 ser3ing as an OJ be,'een ,he issuer an. ,he pur/haser* n in3es,or %oans mone- ,o an ins,i,u,ion7 su/h as a go3ernmen, or business ,he bon. a/,s as a 'ri,,en promise ,o repa- ,he %oan on a spe/i+i/ ma,uri,- .a,e* $orma%%-7 bon.s a%so in/%u.e perio.i/ in,eres, pa-men,s o3er ,he bon.s .ura,ion7 'hi/h means ,ha, ,he repa-men, o+ prin/ip%e an. in,eres, o//ur separa,e%-* Bon. pur/hases are genera%%/onsi.ere. sa+e7 an. high%- ra,e. /orpora,e or go3ernmen, bon.s /ome 'i,h %i,,%e per/ei3e. .e+au%, ris5* Deben,ures ha3e a more spe/i+i/ purpose ,han bon.s* Bo,h /an be use. ,o raise /api,a%7 bu, .eben,ures are ,-pi/a%%- issue. ,o raise shor,,erm /api,a% +or up/oming e8penses or ,o pa- +or e8pansions* !ome,imes /a%%e. re3enue bon.s be/ause ,he- ma- be e8pe/,e. ,o be pai. +or ou, o+ ,he pro/ee.s o+ a ne' business proCe/,7 .eben,ures are ne3er asse,ba/5e. >,he- are no, se/ure. b- an- /o%%a,era%? an. are on%- ba/5e. b- ,he /re.i, o+ ,he issuer* )hese .eb, ins,rumen,s pro3i.e /ompanies an. go3ernmen,s 'i,h a 'a- ,o +inan/e be-on. ,heir norma% /ash +%o's* !ome .eben,ures an. bon.s are/on3er,ib%e7 'hi/h means ,ha, ,he- /an be /on3er,e. in,o /ompan- s,o/5* n a sense7 a%% .eben,ures are bon.s7 bu, no, a%% bon.s are .eben,ures* Whene3er a bon. is unse/ure.7 i, /an be re+erre. ,o as a .eben,ure*
3.3$pinion
Our group members 'ou%. %i5e ,o .is/uss ,he %a,es, ne's abou, 1Ma%a-sia De3e%opmen, Bh.*s bon.s *
=irs,%-7 1Ma%a-sia De3e%opmen, Bh.*s bon.s are ,ra.ing %i5e Cun5 as in3es,ors see5 grea,er /%ari,- o3er ,he s,a,e in3es,men, +un.s p%ans ,o 'in. .o'n an. se%% o++ asse,s *)he prob%ens +a/e. b- 1 Ma%a-sia De3e%opmen, Bh. is ,he- ha3e a %o, o+ asse,s ,ha, aren, genera,ing enough /ash +%o' ,o ser3i/e ,heir .eb, * 1MDBs ne8, ,'o .o%%ar bon. /oupons are .ue on Mar/h 9 an. Ma- 117 a//or.ing ,o .a,a /ompi%e. b- B%oomberg* )he /ompan- s,rugg%e. ,o mee, i,s %oan repa-men, .espi,e re.eeming a J!N2*"2 bi%%ion (a-man s%an.s in3es,men,* //or.ing ,o ,he repor,7 1MDB is hoping ,o ease i,s /ripp%ing .eb, bur.en b- %is,ing i,s po'er genera,ion asse,s ,hrough an ini,ia% pub%i/ o++ering >EO? s/he.u%e. +or $o3ember 2014*(orners,one in3es,ors 'i%% in/%u.e s,a,eo'ne. en,i,ies +rom bu Dhabi >20? an. Pa,ar base. in3es,or groups >?*1MDB has regu%ar%- ma.e ,he hea.%ines +or a%% ,he 'rong reasons e3er sin/e i, 'as se, up b- Erime Minis,er Da,u5 !eri $aCib a;a5 in 2009*%% ,he ba. ne's /ause. ,he /ompan- has ba. repu,a,ion* e/en,%-7,he boar. o+ .ire/,or ha3e he%. mee,ings 'i,h members o+ ,he me.ia 'here %is,ene. ,o an. respon.e. ,o ,heir /on/erns in or.er ,o in/rease ,heir ,ransparen/-*Ho'e3er7 //or.ing ,o 1MDBs %a,es, annua% au.i,e. a//oun,s7 ,he /ompan- has ,o,a% borro'ings o+ near%- M42 bi%%ion* =or ,his7 1MDB s,a,e. i, has M1*4 bi%%ion in ,o,a% asse,s*Ye, -ear a+,er -ear 1MDB /on,inua%%- re%ie. on proper,- re3a%ua,ion gains Q essen,ia%%- paper pro+i,s ,ha, .oes no, ,rans%a,e in,o mone- in ,he ban5 7,o pos, pro+i,s 'i,h ,he e8/ep,ion o+ ,he 2014 +inan/ia% -ear >=Y14?7.uring 'hi/h e3en proper,- re3a%ua,ion gains 'ere insu++i/ien, ,o push numbers in,o ,he b%a/5*Wha, ,his means is ,ha, sin/e i,s in/orpora,ion7 1MDB has /on,inuous%- been in re.* Wha, has 1MDB been .oing 'i,h i,s borro'ings ,henR* =ur,hermore7 One o+ ,he s,ranges, ,hings abou, 1MDB7 .espi,e boas,ing pro+essiona% managemen,7 is ,he misma,/h be,'een i,s in3es,men,s an. +inan/ing /os,s*//or.ing ,o 1MDBs %a,es, annua% au.i,e. a//oun,s7 1MDB is pa-ing in,eres, ranging +rom ,o 1 annua%%- +or i,s borro'ings* $o' /on,ras, ,his 'i,h ,he in3es,men, re,urns 1MDB repor,e. in ,he same a//oun,s: Cus, "*26 +or i,s M1"*4 bi%%ion in 3arious p%a/es o3erseas*$o, ,o men,ion ,he hear,'ren/hing 0*6 in,eres, ra,e 1MDB ma.e in =Y14 +or i,s big pi%e o+ /ash amoun,ing ,o M4 bi%%ion7 s,a,e. b- 1MDB in ,he same a//oun,s*!pe/,a/u%ar re,urns ma- be more .i++i/u%, ,hese .a-s bu, sure%- 1MDBs pro+essiona%s /an +in. pru.en, in3es,men,s +or reasonab%e re,urns ,o /o3er i,s +inan/ing /os,s a, ,he 3er- %eas,* Wh- in3es, in some,hing ,ha, gi3es -ou %ess re,urn ,ha, i, /os,s -ou ,o in3es, in ,he +irs, p%a/eR $e3er,he%ess7 ea%%-R , is es,ab%ishe. ,ha, 1MDB is +a/ing .i++i/u%,- pa-ing some o+ i,s shor, ,erm %oans* Bernama pre3ious%- repor,e. /hairman &o.in Wo5 Kamaru..in as sa-ing ,ha, ,he
/ompan- is %oo5ing ,o res,ru/,ure some o+ i,s shor,,erm %oans ,o ma,/h i,s %onger,erm in3es,men,s*emember ,ha, 1MDB ha. been on a borro'ing spree 'i,h a m-s,erious urgen/- ,o raise +un.s o3er ,he -ears* Ye, i+ i, is ma5ing %ong,erm in3es,men,s7 'h- ,he urgen/- in ,he +irs, p%a/eR n +a/, 1MDB ha. been si,,ing on huge /ash pi%es e3en as i, borro'e. more an. more* n 201"7 +or e8amp%e7 i, ha. /ash an. near/ash i,ems amoun,ing ,o M2" bi%%ion -e, i, 'en, on ,o borro' bi%%ions more*)his a..s ,o ,he m-s,er- o+ ,he shor,,erm %oans7 'hi/h ,-pi/a%%- /ome 'i,h higher in,eres, ra,es* Wh- 'i%%ing%- pa- higher in,eres, ra,es +or /ash in a hurr- i+ -oure no, in a hurr,o use ,he /ash an-'a-R //or.ing ,o 1MDBs %a,es, annua% au.i,e. a//oun,s7 ,he /ompan- has M"*4 bi%%ion in /ash an. ban5 ba%an/es 'i,h ano,her M12* bi%%ion in a3ai%ab%e+orsa%e in3es,men,s*Bu, one 'ee5 ago eu,ers repor,e. ,ha, businessman nan.a Krishnan is %en.ing 1MDB M2 bi%%ion ,o repai,s %oan /ommi,men,s 'i,h %o/a% ban5s* $ei,her ,he go3ernmen, nor 1MDB ha. e8p%i/i,%- .enie. ,his* Wh- .oes 1MDB nee. ,o borro' mone- +rom a pri3a,e businessman ,o repa- i,s %oans i+ i, ha. so mu/h /ash on han.R O+ M"*4 bi%%ion7 some M2*"# bi%%ion are unres,ri/,e. .eposi,s an. p%a/emen,s 'i,h %i/ense. ban5s7 a//or.ing ,o 1MDBs a//oun,s* n mi.anuar- ,his -ear7 1MDB s,a,e. ,ha, i,s in3es,men, o+ J!N2*"2 bi%%ion in a (a-man s%an.sregis,ere. +un. ha. been +u%%- re.eeme.* )o be pre/ise7 ,he +un. re.eeme. ,he remaining J!N1*1 bi%%ion a+,er ha3ing re.eeme. J!N1*22 bi%%ion pre3ious%- o+ ,he origina% J!N2*"2 bi%%ion in3es,e.* Bu, ,his mone- 'as Ssubse@uen,%in3es,e. in a +un. un.er ,he regu%a,or- super3ision o+ ,he (a-man Mone,ar- u,hori,-F7 sai. ru% in ,he s,a,emen,*$o' as no,e. abo3e 1MDB is +a/ing %oan repa-men, issues an. ,he /ompan- 'ou%. 5no' i,s /ash re@uiremen,s in mee,ing ,he ob%iga,ions* Wh- rein3es, ,he monere.eeme. 'hen -ou nee. /ash a, home urgen,%-R)hese issues are Cus, ,he ,ip o+ ,he i/eberg ,ha, is 1MDBs issues* We ,hin5 ,ha, 'e shou%. be a'are o+ ,his bon.s*)his is .ue ,o ,he reason ,ha, ,he s,u++s abou, 1MDB are man- o+ un/er,ain,-*e/en, %oan ser3i/ing .i++i/u%,ies ha3e /rea,e. s,ress on Ma%a-sian +inan/ia% asse,s an. +ur,her su/h ne's /ou%. ha3e ,he same resu%,*
-.)Conclusion
)hroughou, a%% ,he resear/hes an. sur3e- ,ha, 'e +oun.7 i, 'as 3er- in,eres,ing ,ha, bon.s is ,ha, huge 5no'%e.ge ,o us* We are p%ease. ,ha, ,his assignmen, has been issue ,o us an. 'e ha3ing a 'on.er+u% ,ime spen.ing ,oge,her .oing ,his assignmen,* n sum7 ,ra.ing o+ bon.s o//ur in bon. mar5e,* Bon. mar5e, is 'here ,ra.ing o+ .eb, se/uri,ies o//urs* )he bon. mar5e, basi/a%%- in/%u.es go3ernmen,issue. se/uri,ies an. /orpora,e . eb, se/uri,ies ,ha, +a/i%i,a,e ,he ,rans+er o+ /api,a% +rom sa3er ,o ,he issuers or organi;a,ion ,ha, re@uire /api,a% +or go3ernmen, proCe/,s7 business e8pansions an. ongoing opera,ions* )here are 3arie,- o+ bon.s ,ha, represen,s .i++eren, 5in.s o+ in3es,men, su/h as s,raigh, bon.7 /on3er,ib%e bon.s7 ;ero /oupon7 /agamas bon.s an. o,hers 'hi/h some are no, in Ma%a-sia* E%us7 mos, ,ra.ing in ,he bon. mar5e, .one i, in ,he 'a- o+ o3er,he/oun,er >O)(?7 an. is /ompose. o+ ,he primar- mar5e, an. ,he se/on.ar- mar5e,* Bon.s are a,,ra/,i3e in ,he 'a- ,ha, bon.s pro3i.e in,eres, in/ome 'hi/h man- in3es,ors per/ei3e grea,er sa+e,- in bon. in3es,men, ,han in s,o/5 in3es,men, an. a%so ,he oppor,uni,- +or /api,a% gains bu, /ompare. ,o s,o/5s7 bon.s o++er %o'er re,urns* Bon.s a%so gi3e a %o'er ris5 an. s,abi%i,- ,o por,+o%io /ompare. ,o s,o/5 ,ha, gi3es a higher ris5 'i,h a higher re,urn* O+ /ourse7 ,here are ris5s ,oo in bon.s %i5e higher o+ in,eres, ris5 +or %onger ,he bon. he%.7 .e+au%, ris57 pur/hasing po'er >in+%a,ion?7 %
[email protected],- ris57 /a%% ris5 an. a%so ,he +amous rein3es,men, ris5* n /omparison7 bon.s mar5e, ha3e a %o'er ris5 an. more s,ab%e ,han ,he s,o/5 mar5e,* Jn+or,una,e7 s,o/5 mar5e, /ome 'i,h a grea,er re,urn 'i,h a grea,er ris5 ,han bon.s mar5e, an. ,ha, 'ha, ma5e mos, o+ ,he in3es,ors 'ou%. %i5e ,o in3es, in s,o/5 mar5e, ra,her ,han in bon.s mar5e,* Despi,e ,ha,7 s,o/5 mar5e, are easier ,o se%% or bu- ,han in ,he bon.s mar5e, as bon.s mar5e, .i.n, %is, +or pub%i/ an. i, a%'a-s go o3er,he/oun,er 'hi/h means ,ha, ,he in3es,men, is .one ,hrough bro5er an. no, .ire/,%- ,o pub%i/* n ,he nu,she%%7 'he,her -ou %i5e ,o in3es, in bon.s7 s,o/5s7 mone- mar5e,s7 rea% es,a,e or o,hers7 ,he mos, impor,an, par, is ,ha, ,he in3es,men, /an ge, -ou a re,urn ,ha, -ou 'ou%. %i5e ,o ha3e* )o m- sugges,ion7 ,r- ,o in3es, 'hen one is -oung as ,he sooner -ou ge, in,o ,he in3es,men, 'or%.7 ,he grea,er 5no'%e.ge an. e8perien/es -ou 'ou%. ha3e /ompare. ,o ,he o,her peop%e* n. a%% bu, no, %eas,7 'ou%. %i5e ,o ,han5 ,o Mr &ee as our ,u,or 'ho gui.e us ,o ma5e ,his proCe/, happen* #.)+e/erences
L !e/uri,ies (ommission Ma%a-sia*3ai%ab%e +rom:TOn%ineU >h,,p:AA'''*s/*/om*m-A? T//esse.: Ma- 201U*
L M&Y!$ DB) !(J)! $D !JKJK MK) 2009 Gui.e +or ssuers an. n3es,ors oin, Eub%i/a,ion b- Ban5 $egara Ma%a-sia an. !e/uri,ies (ommission Ma%a-sia *3ai%ab%e +rom:TOn%ineU >h,,p:AA'''*s/*/om*m-AengAh,m%Abon.m5,AMa%a-sianDeb,!e/uri,ies!u5u5V2009*p.+?T//esse.: Ma- 201U* L Bon. n+o Hub >Ban5 $egara Ma%a-sia? *3ai%ab%e +rom:TOn%ineU >h,,p:AAbon.in+o*bnm*go3*m-Apor,a%Aser3er*p,Ropen14obCD2#2#paren, nameM-Eageparen,i.0mo.e2 ?* T//esse.: Ma- 201U L B! Eapers $o 26* )he /orpora,e bon. mar5e, in Ma%a-sia* Muhamma. bin brahim an. .rian Wong7 Ban5 $egara Ma%a-sia*3ai%ab%e +rom:TOn%ineU >h,,p:AA'''*bis*orgApub%Abpp.+Abispap26p*p.+ ?* T//esse.: Ma- 201U* L sianBon.sOn%ine 'ebsi,e* 3ai%ab%e +rom:TOn%ineU >'''*asianbon.son%ine*a.b*org?* T//esse.: Ma- 201U*
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