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== Top 20 FREQUENT WORDS ==
securities 754
sukuk 650
debt 471
malaysia 366
malaysian 280
investors 273
islamic 217
issuers 186
bonds 185
government 162
bond 160
issuance 150
issue 139
issued 138
berhad 135
foreign 133
corporate 126
negara 119
financial 115
guidelines 102



== DOCUMENT KEY POINTS ==
*however this guidebook cannot be deemed a comprehensive statement of all the intricacies of laws and practices relating to malaysian debt securities nor can it take account of the circumstances of every investor
*therefore reliance should not be placed on the guidebook investors who want advice on which malaysian debt securities or other investments are best suited to them or on trading strategies should consult professional advisors

*the increased domestic and foreign participation in the market will not only contribute to the further development of the market but will also strengthen financial and economic inter linkages with other parts of the world
*to ensure that access to financing through the financial market remains unhindered during the recent global financial turmoil bank negara malaysia recently established danajamin nasional berhad a national financial guarantee insurer to provide credit enhancement for viable corporations to raise financing from the debt securities and sukuk market

*i am confident that this guidebook will enable market participants to have a better understanding and appreciation of the increasingly important role that the debt securities and sukuk market plays in the financial system and that there will be greater interest generated among local and foreign investors issuers and intermediaries to consider tapping opportunities in this fast growing market

*history of bond performance in malaysia default history glossary and abbreviations websites for information on the malaysian debt securities and sukuk market tables table
*corporate bond defaults a by number of issuers amount and percentage of outstanding amount charts chart

*link between primary and secondary markets through etp and settlement chart

*these emanate from all sectors of the economy from quasi government entities and public companies from the financial sector to real estate and infrastructure as well as short term notes and papers issued by the government

*a testament to the significance of the malaysian fixed income market in the global bond markets is its inclusion in a number of global indices such as the inclusion of malaysian government bonds in the world government bond index which is one of the most referenced benchmark market index by the international investing community as well as in the barclays global aggregate index

*corporate or private debt securities spurred by strong economic expansion supported by the efforts of the regulators and well received by market participants the corporate debt securities market also interchangeably known as the private debt securities or pds market in malaysia has remained on an upward growth trajectory
*the catalyst for this remarkable growth was the asian financial crisis in which brought to the fore the mismatches in funding maturities and the need for diversification of funding away from the traditional banking sector

*it was the preferred issuance centre for the first sukuk issuance by a multilateral financial institution international finance corporation the first ringgitdenominated sukuk by the islamic development bank the first sukuk issuance by a japanese multinational toyota corporation and the first sukuk issuance by a japaneseowned corporation aeon credit services

*outstanding malaysian debt securities and sukuk by type of issue rm billion chart
*malaysian debt securities and sukuk market a guide for issuers investors introduction chart

*ratings distribution of corporate bonds and sukuk issued in malaysia percentage as at end
*figures exclude issuance by cagamas berhad and khazanah nasional berhad

*it was established on january under the central bank of malaya ordinance with the following objectives i to issue currency and keep reserves safeguarding the value of the currency ii to act as a banker and financial advisor to the government iii to promote monetary stability and a sound financial structure and iv to influence the credit situation to the advantage of the country
*the regulators play a dual role of supervising the market intermediaries and the activities in the market as well as actively supporting and developing the market infrastructure and fostering a conducive and facilitative environment

*these acts include the central bank of malaysia act revised or cba ie a revision of the central bank of malaya ordinance the islamic banking act the banking and financial institutions act or bafia the takaful act the insurance act and the development financial institutions act

*the treasury bills local act empowers the minister of finance to borrow money through the issuance of treasury bills while the loan local act authorises bank negara malaysia to raise funds within malaysia on behalf of the minister for the development fund

*

*regulation of the corporate debt securities and corporate sukuk market the sc administers the capital markets and services act cmsa which governs a substantial part of the activities in the domestic corporate debt securities and corporate sukuk market
*in addition bank negara malaysia also issues rules and guidelines governing the issuance allotment interest payment redemption and settlement of scripless securities under fully automated system for issuing tendering fast and the real time electronic transfer of funds and securities system rentas

*malaysian debt securities and sukuk market legal and regulatory a guide for issuers investors framework corporate debt securities and corporate sukuk has been developed with the following objectives in mind a to rationalise a fragmented regulatory structure a to expedite and create a facilitative and transparent approval scheme for corporate debt securities and corporate sukuk a to impose greater disclosure requirements for better protection of corporate debt securities and corporate sukuk investors and to enhance legal protection afforded to these investors and a to enhance secondary market liquidity for corporate debt securities and corporate sukuk
*over the years the sc has issued a comprehensive set of guidelines regulations and practice notes to guide and clarify the requirements for all aspects of a corporate debt securities and corporate sukuk issue

*instruments in the malaysian debt securities and sukuk market a well diversified range of debt securities and sukuk have been issued in the malaysian market encompassing both conventional instruments as well as securities issued according to islamic principles
*in addition there are securities issued by khazanah nasional berhad ie the government s investment arm and mortgage backed securities issued by cagamas berhad cagamas ie the national mortgage corporation and its subsidiary cagamas mbs berhad

*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market real estate and power generation to the services sectors such as finance transport and communication and retail

*upon maturity the government will redeem the gii and pay the nominal value of the securities to the gii holders
*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market the secondary market for benchmark securities is liquid with average transaction volume varying from rm million to rm million

*successful bidders will pay cash to the government and subsequently sell back the assets to the government at par based on credit ter miss in return the government will issue mitb to the bidders to represent the debt created
*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market malaysian treasury bills mtb mtb are short term securities issued by the government of malaysia to raise shortterm funds for its working capital

*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market sukuk bank negara malaysia ijarah sbnmi sbnmi are issued based on the al ijarah or sale and lease back concept a structure that is widely used in the middle east
*bank negara monetary notes bnmn bnmn which replaced the bank negara bills and bank negara negotiable notes are issued for the purpose of managing liquidity in both the conventional and islamic financial markets

*various types of cagamas papers are available in the market cagamas bonds cagb i fixed rate bonds fixed rate bonds have tenures of up to years and carry a fixed coupon rate that is determined at the point of issuance
*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market years and above

*sanadat mudharabah cagamas smc sanadat mudharabah cagamas are sukuk issued under the islamic principle of mudharabah profit sharing to finance the purchase of islamic housing loans granted on the basis of bai bithaman ajil and the purchase of islamic hire purchase financing granted under the principle of ijarah thumma al bai
*cagamas notes cagn cagamas notes are short term instruments with maturities of to months issued at either a discount from face value where the notes are redeemable at their nominal value upon maturity or as interest bearing notes where interest is paid on a semi annual basis or such other periodic basis as determined by cagamas

*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market nif is a low cost substitute for syndicated bank loans since its rates are pegged to the kuala lumpur inter bank offer rate klibor and not the base lending rate blr as in the case of bank loans

*they are called plain vanillas in some debt markets as these bonds do not have any enhancement like warrants attached to them or additional features such as put or call options and tend to carry relatively higher coupon rates

*convertible bonds convertible bonds are fixed rate securities that grant the bondholders the right to convert the bonds into a specific number of the issuer s common shares at a predetermined conversion rate and price
*bonds with warrants allow listed companies to raise capital initially in the form of debt and subsequently in the form of equity at a premium to its current share price and at a lower interest cost than would be achievable through a straight bond issue

*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market as a warrant entitles the bondholder to an option to purchase a specified amount of the company s shares bonds issued with warrants have low coupon rates to compensate the issuers
*there are types of loan stocks redeemable convertible loan stocks these are debt securities that give the holders the right to convert the loan stocks into new ordinary shares during a specified period at a pre determined conversion rate and price

*listed debt securities and sukuk under exempt regime in an effort to promote the malaysian debt securities and sukuk market whilst enhancing the breadth and depth of investment options on the malaysian capital market debt securities and sukuk can now be listed on bursa malaysia under a new exempt regime by both listed and non listed issuers
*billion global sukuk issuance by petroliam nasional berhad petronas as well as all the outstanding debt securities and sukuk amounting to rm billion and rm billion respectively issued by cagamas mbs berhad cagamas mbs under its five residential mortgage backed securitisation transactions

*malaysian debt securities and sukuk market instruments in the malaysian debt a guide for issuers investors securities and sukuk market futures contracts futures contracts are available in the malaysian market to enable investors to hedge short term or long term interest rate risks of holding debt securities or any investment in the malaysian capital market

*an islamic profit rate swap is an agreement to exchange profit rates between a fixed rate party and a floating rate party or vice versa implemented through the execution of a series of underlying contracts to trade certain assets under the shariah contracts
*non resident investors may hedge exchange rate risks from investments through forward foreign exchange or foreign exchange derivatives such as currency options and cross currency swap with any licensed onshore banking institutions

*in its simplest form sukuk are certificates of equal value that represent an undivided interest proportional to the investor s interest in the ownership of an underlying asset both tangible and intangible usufruct services or investments in particular projects or special investment activities

*ii rights to cashflow from the contract of exchange but not the asset in the case of a sukuk issued as evidence of indebtedness arising from the sale of asset based on contracts of exchange other than ijarah such as those originating from bai bithaman ajil murabahah and istisna the claim is on the obligations stemming from the applied contract of exchange and not ownership of the physical asset as ownership has been transferred to the obligor

*unlike securities issued under a conventional basis where the investor base is confined to only investors in the conventional bond market sukuk has access to a larger pool of investors from both sides of the investing worlds a a captive investor base such as islamic pension funds and islamic insurance companies which can only invest in shariah compliant instruments and those that traditionally invest in conventional bonds but are now seeking diversification and a greater range of instruments to invest in irrespective of whether the instrument is shariah compliant

*the mifc initiative was launched by the government in august to maintain the country s edge in the area of islamic finance it aims to bring the nation to the next level of islamic financial development fortifying malaysia s position as a preferred global centre for issuing trading and investing in islamic securities
*malaysian debt securities and sukuk market a guide for issuers investors sukuk the strategic initiative to promote malaysia as an international islamic financial centre and to become a centre of sukuk origination is expected to provide further impetus to the development of an increasingly vibrant and progressive domestic bond market

*indeed malaysia has proven itself as a centre of choice for foreign corporations to issue sukuk as well as to invest in these papers as it offers one of the most diverse in terms of types of securities tenures asset classes structures issuers and risk profiles innovative and sophisticated array of investment choices in the world
*malaysia s bedrock in islamic finance malaysia s strength in islamic finance is firmly grounded by the following factors a more than years industry level experience in islamic finance a full range of service providers islamic banks of which are foreign islamic financial institutions

*at the same time about of bursa malaysia s counters were shariah compliant while over of all long term papers approved by the sc were sukuk a established and comprehensive regulatory and shariah governance framework in accordance with best practices together with a neutral tax policy a critical mass and extensive range of islamic products and services a talent development infrastructure and a active secondary market trading in the islamic money and capital markets equipped with cutting edge technology
*the approved shariah concepts and principles for the purpose of structuring documenting and trading of islamic securities are i primary principles profit and loss sharing musyarakah a partnership arrangement between two parties or more to finance a business venture where all parties contribute capital either in the form of cash or in kind for the purpose of financing the business venture

*advance purchase bai salam a sale and purchase contract where the payment is made in cash at the point of contract but the delivery of the asset purchased will be deferred to a predetermined date
*leasing ijarah a manfaah usufruct type of contract where a lessor owner leases out an asset or equipment to its client at an agreed rental fee and pre determined lease period upon the a aqad contract

*malaysian debt securities and sukuk market a guide for issuers investors sukuk sale and repurchase bai wafa a contract with the condition that when the seller pays back the price of goods sold the buyer returns the goods to the seller

*rebate ibra an act by a person to withdraw his right to collect payment from a person who has the obligation to repay the amount borrowed from the former
*malaysian debt securities and sukuk market a guide for issuers investors sukuk ii supplementary concepts and principles debt trading bai dayn a transaction that involves the sale and purchase of securities or debt certificates that conform with shariah

*malaysian debt securities and sukuk market a guide for issuers investors sukuk pre agreed contract ittifaq dhimni a sale and re purchase of the underlying asset the prices of which are agreed upon by the parties prior to the completion of the contract
*agency wakalah a contract that gives power to a person to nominate another to act on their behalf as long as they are alive based on the agreed terms and conditions

*key guidelines that have been issued to streamline the issuance process for the corporate debt securities and sukuk market include the following a guidelines on the offering of private debt securities the guidelines on the offering of private debt securities pds guidelines govern all issues of offers for subscription or purchases of or invitations to
*issuing debt securities and sukuk in malaysia the sc s guidelines and framework for the issuance of corporate debt securities and sukuk serve to expedite and create a facilitative as well as transparent approval scheme for corporate issuances they impose greater disclosure requirements and enhance legal protection for investors

*a guidelines on the offering of islamic securities in addition to the issuance requirements stated in the pds guidelines the guidelines on the offering of islamic securities is guidelines stipulate the additional shariah criteria that must be met with regard to all issues offers or invitations of islamic securities that fall under the ambit of the cmsa
*under these guidelines speedy approval of pds issues can be expected as issuers and their advisors need only comply with the transparency requirements laid out in the said guidelines by submitting a declaration to the sc that the requirements under the pds guidelines have been complied with

*this includes obtaining the necessary regulatory or contractual consent to effect the transfer of such assets from an originator to an spv and not omitting any act that enables a debtor of the originator to exercise the right to set off in relation to such assets iv the assets are transferred at fair value v no trust or third party s interest appears to exist in competition with an originator s interests in the assets and vi where the interest of an originator in the assets is as a chargee the charge must have been created for a period of more than six months before the transfer
*abs however excludes all debt securities or islamic securities that are capable of being converted into equity and whether redeemable or otherwise such as exchangeable bonds and pds or sukuk with attached warrants

*srs is available to issuers who are able to meet the following requirements i issuers must be good corporate citizens and must not have been prosecuted for breach of any securities or company laws or defaulted on borrowed money that had resulted in the immediate recall of the loan by the lender in the preceding months prior to the registration of the shelf prospectus and during the effective period of the shelf prospectus
*malaysian debt securities and sukuk market issuing debt securities a guide for issuers investors and sukuk in malaysia a guidelines on minimum content requirements for trust deeds a trust deed that complies with the guidelines on minimum content requirements for trust deeds is required irrespective of whether the pds issue is by a public or private limited company

*malaysian debt securities and sukuk market issuing debt securities a guide for issuers investors and sukuk in malaysia ii the total offering must be not less than rm million in nominal value and iii the pds must have obtained an investment grade rating at the time of the registration of the shelf prospectus and throughout the validity period of the shelf prospectus
*this system enables issuers to time pds issues in such a way as to take advantage of current market conditions exchange rates and particularly in relation to a bond issue movements in interest rates thus reducing costs for issuers

*an excluded invitation or excluded offer is one that is specified in schedule of the cmsa or which is prescribed by the minister of finance on the recommendation of the sc as such

*the facilitative issuance framework and conducive environment of the malaysian debt securities and sukuk market have not only led to sizeable issues from domestic corporations but have also attracted a large number of issuances from foreign corporations
*issuer size of issuance or issuance or facilities first drawdown first rm billion rm billion drawdown gulf investment corporation

*pursuant to this the sc will grant its approval upon fulfillment of the following requirements a submission of a full set of documents and relevant information as clearly outlined in the pds guidelines abs guidelines or the is guidelines which will allow investors to make informed decisions b compliance with a set of transparent criteria required of an issuer and a principal advisor under these guidelines and c compliance with any additional requirements that may be imposed by the sc to protect the interests of pds or sukuk holders
*malaysian debt securities and sukuk market issuing debt securities a guide for issuers investors and sukuk in malaysia requirements for a ringgit denominated issue a disclosure based approach is adopted for the issue offer or invitation in regard to a pds or sukuk issue for domestic issuers

*in addition use of international documentation is now permitted for all ringgitdenominated bond or sukuk offerings whether by local or foreign issuers that are rated aaa on the local currency rating scale or a minimum bbb on a foreign currency rating scale

*the sac has outlined several shariah principles that can be adopted in the structuring and issuance of sukuk as follows i mudharabah sukuk by securitising islamic hire purchase financing the sac has approved the concept and mechanism applied to sukuk issuance based on the mudharabah principle through the securitisation of islamic hirepurchase financing al ijarah thumma al bai
*malaysian debt securities and sukuk market issuing debt securities a guide for issuers investors and sukuk in malaysia where the shariah advisor to be appointed is a company such company must have in its employment a minimum of one individual who meets the criteria mentioned in above

*while the ta widh rate on failure to settle the payment of the principal is based on the current market rate in the islamic inter bank money market it too cannot be compounded
*malaysian debt securities and sukuk market issuing debt securities a guide for issuers investors and sukuk in malaysia iv third party guarantee on capital sukuk issuers are allowed to apply third party guarantees to the capital invested under the principles of musyarakah and muqaradhah mudharabah

*x asset pricing the sac has issued guidelines on asset pricing for sukuk to facilitate the process of determining the selling price of the asset used as an underlying asset for sukuk structured under the principles of ijarah bai bithaman ajil bai inah and murabahah
*to further facilitate the asset pricing process the sac has resolved that if the market value cannot be identified then fair value or any other suitable value can be applied as long as it is on a willing buyer willing seller basis and can be evaluated through appropriate valuation methods

*requirements for a foreign currency denominated issue for a foreign currency denominated bonds or sukuk issue the size of the issue should be large enough to contribute to the development of the domestic debt securities and sukuk market
*malaysian debt securities and sukuk market issuing debt securities a guide for issuers investors and sukuk in malaysia xi conventional leasing receivables disallowed as underlying assets for sukuk sukuk issuers must use receivables derived from islamic transactions such as receivables from ijarah transactions as underlying assets

*the statutory requirement to appoint a trustee and enter into a trust deed is exempted if an issue offer or invitation of the foreign currency denominated bonds or sukuk fulfills the following criteria a it is made by the federal government any state government or any statutory body of malaysia or it is guaranteed by the federal government of malaysia b it is made by an aaa rated foreign government mdb mfi or agency or national corporation of a foreign government or c it is made by a qualified issuer exclusively to sophisticated institutional investors
*a submission to the sc shall be made through an advisor in accordance with the clear requirements provided under the guidelines of the offering of islamic securities or the guidelines of the offering of private debt securities whichever is applicable

*the tender announcement detailing the size and exact date of issue will be announced to the market at least business days before the issue date via the fast system this will also be made through major newspapers for government securities
*malaysian debt securities and sukuk market issuing debt securities a guide for issuers investors and sukuk in malaysia operational requirements a issuance all bonds and sukuk save those for which a listing is sought on bursa malaysia are issued on scripless basis through fast operated by bank negara malaysia

*after the conclusion of the book building period the book runner evaluates the collected bids on the basis of certain evaluation criteria and sets the final issue price

*typical structure for the issuance of unlisted corporate debt securities and sukuk financial advisor issuer legal counsel lead arranger final approving principal advisor authority sc controller of foreign exchange if forex admin rules trustee are applicable primary underwriter sign depository and paying subscriber agency agreement issuer trustee lead arranger and bnm rating agency lodge global certificate scripless securities investors
*typical issuance process for short term papers offers notes for bidding issues notes sells notes issuer facility agent tender panel member investor tpm underwriters sells notes offer notes not bought by tpm chart

*own result settlement system financial instrument distribution private issuance to one to access tender to one or many investors or more investors results b depository all unlisted ringgit denominated bonds and sukuk issued must be deposited with rentas with bank negara malaysia as the central depository agent for the bonds and adis in malaysia ie licensed on shore financial institutions and investment banks in malaysia as the sub depositories
*automated to create a to monitor bids for to close a tender to initiate a tender process tender invitation various tenders intervene if necessary tender allotment bidding abortion information to settlement system to submit bids for various tenders to terminate a tender private placement issuance

*facilitating the creation of the issue and stock code and the cashflow involved in the transaction in terms of receiving the proceeds from the issuance on behalf of the issuer and remitting the proceeds to the issuer as well as the payment of interest to investors
*the lead arranger or principal advisor is responsible for submitting the application to the sc for approval while the arranger together with the lead arranger structures the debt or sukuk proposal for the issuer and also performs the due diligence exercise together with a team of lawyers

*under the sc s guidelines on principal advisors for corporate proposals the following institutions may act as principal advisors for the following types of proposals islamic banks investment banks all sukuk proposals or universal brokers investment banks or universal brokers all pds proposals licensed banks all pds and sukuk proposals except for any of the following a pds capable of being converted into new equity a pds of locally incorporated public companies or foreign corporations which are issued together with warrants special scheme brokers proposals for the offering of pds of foreign issuers to investors identified under schedules and of the cmsa
*malaysian debt securities and sukuk market parties in a debt a guide for issuers investors securities or sukuk issue issue after its initial rating to ensure that investors are provided with the relevant information on the issue in a timely and efficient manner

*for the purpose of issuance of foreign currency denominated bonds and sukuk under the joint information note on the issuance of foreign currencydenominated bonds and sukuk in malaysia issued by bank negara malaysia and the sc an advisor means a commercial banks licensed under the banking and financial institutions act or bafia
*a investment banks licensed as both a merchant bank pursuant to section of the bafia and as a dealer pursuant to the cmsa and duly established pursuant to the guidelines on investment banks jointly issued by bank negara malaysia and the sc

*malaysian debt securities and sukuk market parties in a debt a guide for issuers investors securities or sukuk issue paying agent the paying agent is responsible for the cashflow involved in the transaction in terms of receiving the proceeds from the issuance on behalf of the issuer and remitting the proceeds to the issuer as well as the payment of interest to investors
*a set of guidelines on the standards expected from a due diligence exercise has been issued by the sc ie the guidelines on due diligence conduct for corporate proposals which came into effect on february

*the trustee will among others vet through the transactions documents of a bond or sukuk issue to ensure to the best of its ability the following i that there are no inconsistencies or conflicts of interest between the provisions of the trust deed and the conditions stated in the sc s letter of approval and in the term sheet approved by the sc ii that there are no provisions in any of the transaction documents that are inconsistent or in conflict with or may lead to inconsistency or conflict with the trustee s duties and iii that the sc s guidelines on the minimum content requirement for trust deeds have been complied with

*this is in recognition of their vital role in evaluating the probability of default of a debt securities or sukuk issue and the importance investors place on ratings for their investment decisions despite the fact that all rating reports carry a disclaimer expressly stating that a rating is not a recommendation to purchase sell or hold a security s market price or its suitability for a particular investment nor does it involve any audit by the rating agency
*where the cra s code of conduct differs in substance from the provisions of the iocso cra code the rating agency must explain where and why these differences exist and fully disclose this on its website

*malaysian debt securities and sukuk market parties in a debt a guide for issuers investors securities or sukuk issue a cra therefore performs the following functions i investor protection the independent objective analysis of the credit quality of debt and sukuk issues aids the investor in making informed choices to determine the level of risk and associated returns they are willing to undertake for their investment

*issuers will need to pay a premium commensurate with the perceived risk of the issuer to these fgis who will undertake to pay the interest and capital repayment in the event that the issuer fails to do so
*malaysian debt securities and sukuk market parties in a debt a guide for issuers investors securities or sukuk issue v lower cost of borrowing a high rating assigned to a corporate borrower translates into a lower cost of borrowing for the issuer as the risk premium demanded by investors is lower

*investing in debt securities and sukuk in malaysia attractiveness of investing in debt securities and sukuk as a low risk liquid asset with fairly good returns debt securities and sukuk generally offer many attractions to investors as follows a investors are provided with a steady stream of income through the regular coupon payments that the issuer has contracted to pay throughout the tenure of the instrument or profit payments in the case of sukuk
*should the investor purchase the debt securities or sukuk at a discount they are able to enjoy a capital gain on redemption at maturity a offers high liquidity a welcome feature to investors who face the problem of not being able to fully recover their money on demand

*pds or sukuk are low risk assets and as long as the issuer does not default the investor receives coupons or profit payments a hybrid bonds and islamic securities such as exchangeable sukuk provide investors with the opportunity of profiting upon converting their convertible bonds or warrants or exchangeable sukuk in the case of islamic securities into shares at a future date should the price of the underlying shares appreciate beyond the conversion or exercise price and a in the event the issuer becomes insolvent bondholders as providers of loan capital have a prior claim on the company s assets
*the annual turnover ratio for corporate bonds in malaysia is higher than those for other asean countries while the ratio for mgs is also relatively high compared to other markets in the region

*malaysian debt securities and sukuk market investing in debt a guide for issuers investors securities and sukuk in malaysia chart
*annual bond turnover ratios for the year government corporate

*malaysian debt securities and sukuk market investing in debt a guide for issuers investors securities and sukuk in malaysia bond pricing agency investors and issuers in the malaysian debt securities and sukuk market may obtain information on the prices of all ringgit denominated bonds and sukuk from a bond pricing agency

*retail investors need to maintain a current or savings account with an adi for cash settlement of their transactions as well as for the crediting of semi annual coupon payments and principal repayment upon maturity of the securities
*malaysian debt securities and sukuk market investing in debt a guide for issuers investors securities and sukuk in malaysia investors with regard to payment of interest and redemption proceeds

*these investors are defined as individuals whose total net personal assets exceed rm million or its equivalent in foreign currencies a corporation with total net assets exceeding rm million or its equivalent in foreign currencies based on its last audited accounts and a person who acquires them as principal for an aggregate consideration of not less than rm or its equivalent in foreign currencies for each transaction

*malaysian debt securities and sukuk market investing in debt a guide for issuers investors securities and sukuk in malaysia a an electronic order matching platform for the matching of bid and ask quotes for mgs gii and corporate issues and a an advertisement and a negotiation platform where the dealers can advertise and negotiate for a one to one deals for all debt securities and sukuk
*link between primary and secondary markets through etp and settlement information delivery channels bnm s website information providers ips pre post trading data fast electronic rentas referential data trading platform etp purpose a creation of primary issuance a trading platform for debt a depository registrar for debt securities repo and securities scripless securities money market a otc deal reporting e

*malaysian debt securities and sukuk market investing in debt a guide for issuers investors securities and sukuk in malaysia investing in listed debt securities and sukuk bonds and sukuk which are listed on bursa malaysia may be purchased through a dealer that is a member of the exchange such as investment banks or through remisiers
*the fund sponsor is a licensed fund management company that organises the investment strategy registers the organising and offering documents maintains a unit holder registry and supervises all other aspects of the fund s administration

*reporting of trades done all trading in the otc market must be reported in the etp where the seller of the securities will key in the deal and buyers will confirm within a stipulated minutes cut off time from trade execution

*the expansion of the rentas infrastructure to include usd myr transactions via the implementation of the payment versus payment and dvp links with hong kong in and respectively has facilitated the simultaneous settlement of ringgit and usd payments and securities during malaysian business hours
*settlement of foreign currency denominated debt securities and sukuk debt securities and sukuk denominated in us dollars will be settled in rentas on dvp basis while those denominated in other foreign currencies may be settled on a non dvp basis

*malaysian debt securities and sukuk market investing in debt a guide for issuers investors securities and sukuk in malaysia international settlement of debt securities and sukuk scripless securities including mgs and selected debt securities and sukuk can also be settled internationally via major global custodian banks and international central securities depositories icsds such as euroclear and clearstream
*most financial institutions are also members of the society for worldwide inter bank financial telecommunication swift which facilitates the efficient transmission and confirmation of cross border payment and settlement instructions in foreign currencies

*to promote the standards and professionalism of the dealers in the financial market an association known as persatuan pasaran kewangan malaysia ppkm or aci malaysia was established in with the objective of providing an association for those actively engaged in the wholesale financial markets in malaysia

*in the secondary market mgs benchmarks particularly the and year issues are the most actively traded and are commonly referred to as on the run issues while the non mgs benchmarks are referred to as off the run issues
*pds and i pds are obliged to bid for all government and bnm papers in the primary market i pds are however only required to bid for islamic government and bnm papers and to provide two way price quotations for benchmark securities under all

*investors in the malaysian debt securities and sukuk market may avail themselves of the following activities designed to assist them in obtaining the highest returns on their holdings and to promote secondary market activities as well as to enhance liquidity repurchase agreement a repurchase agreement repo is a transaction where securities are sold at a particular price by one party repo seller to the other repo buyer with a commitment on the repo seller s part to repurchase the equivalent securities from the repo buyer and a
*in recognition of the obligations that pds and i pds undertake bnm accords them certain privileges which among others include the ability to deduct the entire holdings of government and bnm papers based on acquisition cost from their eligible liabilities el base for statutory reserve requirement computation and they are eligible to participate as both borrower and lender for securities that are specified by bnm under the securities borrowing and lending sbl programme

*coupon income received during the term of the repo may be returned by the repo buyer to the repo seller via manufactured dividends or paid in cash on the date of coupon payment by the repo buyer to the repo seller
*benchmark or specials repos are securities driven transactions offered by bank negara malaysia to effectively lend specific securities which in turn are either used to cover short selling activities or potential settlement failures by the day s end

*ownership of the securities will be transferred from the borrower to the lender with regard to the collateral and from the lender to the borrower in relation to the securities loaned
*sell and buy back agreement a sell and buy back agreement sbba is an islamic money market transaction between two parties in which an sbba seller sells islamic assets to an sbba buyer at an agreed price subsequently both parties enter into a separate agreement where the buyer promises to sell back the said asset to the seller at an agreed price

*since november regulated short selling has been extended to other inter bank participants to increase liquidity in the domestic bond market accelerate price corrections in overvalued securities facilitate the hedging of interest rate risk and promote activity in the repo as well as the sbl markets
*the value for the settlement date of wi trades must be on or after the securities issuance date but the standard value date is business days value spot

*incentives and foreign exchange administration rules for issuing and investing tax incentives tax treatment for issuers a issuance for pds are exempted from stamp duty all instruments relating to the issuance and transfer of pds approved by the sc are exempted from stamp duty with effect from july
*b tax deductions on expenses incurred in the issuance of sukuk expenses incurred in the issuance of sukuk will be tax deductible until year of assessment

*malaysian debt securities and sukuk market incentives and foreign a guide for issuers investors exchange administration rules for issuing and investing d securitisation exempted from real property gains tax real property gains tax in respect of chargeable gains accrued on the disposal of any chargeable assets to or in favour of an spv or in connection with the repurchase of the chargeable assets to or in favour of the person from whom the assets had been acquired is exempted for the purpose of a securitisation transaction
*h tax exemption from the year of assessment until the year of assessment is granted to a person licensed or registered under the cmsa in respect of income derived from dealing in sukuk and advising on corporate finance relating to the arranging underwriting and distributing of sukuk that originate from malaysia and issued or guaranteed by the government of malaysia or approved by the sc

*malaysian debt securities and sukuk market incentives and foreign a guide for issuers investors exchange administration rules for issuing and investing are exempted from income tax on interest income and profits earned from ringgitdenominated sovereign bonds as well as pds and sukuk approved by the sc
*treatment under foreign exchange administration rules in relation to a ringgit denominated issue by an mdb mfi foreign sovereign foreign quasi sovereign and foreign multinational companies non resident issuers i use of proceeds raised the ringgit funds raised from the issuance of ringgit denominated bonds may be used either in malaysia or overseas

*c investment banks licensed both as a merchant bank pursuant to section of the banking and financial institutions act and a dealer pursuant to section of the capital market and services act and duly established pursuant to the guidelines on investment banks jointly issued by bank negara malaysia and the sc

*malaysian debt securities and sukuk market incentives and foreign a guide for issuers investors exchange administration rules for issuing and investing ii hedging non resident issuers and investors may hedge up to the full amount of their foreign exchange and interest profit exposure vis a vis a ringgit with licensed onshore banks in malaysia

*malaysian debt securities and sukuk market incentives and foreign a guide for issuers investors exchange administration rules for issuing and investing incentives granted by bank negara malaysia for ringgit denominated bonds and sukuk issued by mdbs and mfis i liquidity treatment under the new liquidity framework for banking institutions the ringgit denominated bonds issued by mdbs or mfis will be classified as liquefiable assets under the new liquidity framework for resident banking institutions

*the corporate debt securities and sukuk market had withstood severe stress during the asian financial crisis and again during the economic slowdown in following the collapse of the it bubble in the advanced economies
*notably corporations that funded their long term capital investments or business expansion projects with long term debt securities and sukuk had escaped the negative effects of credit crunches interest rate spikes and exchange rate depreciation

*malaysian debt securities and sukuk market history of bond a guide for issuers investors performance in malaysia the market integrity and confidence established during the formative years which had led to successful redemptions of debt securities and sukuk upon maturity had in turn engendered confidence in and acceptance of long tenured corporate debt securities and sukuk some of which stretch for over years
*default history in the interest of market transparency and to promote investor education ram rating services berhad ram ratings had published its first default study in

*bafia the banking and financial institutions act to provide for the licensing and regulation of institutions carrying on business as a bank finance company merchant bank discount house and money broker and for the regulation of institutions undertaking certain other financial businesses
*bpa bond pricing agency the objective of which is to provide daily independent and objective fair values for all ringgitdenominated bonds and to facilitate daily mark to market valuation of bond portfolios

*is guidelines the securities commission s guidelines on the offering of islamic securities issued on july which stipulate the criteria that must be met with regard to any issue offer or invitation of islamic securities that comes under the ambit of the cmsa

*qualified issuers for the purposes of issuance of bonds in malaysia these refer to the following a mdbs b mfis c foreign governments d agencies or national corporations of the malaysian government or foreign governments e foreign multinational corporations f resident corporations rentas real time electronic transfer of funds and securities system comprising the ifts which deals with large value fund transfers and the ssts which allows the book entry settlement and recording of holdings of scripless debt securities
*pds guidelines the securities commission s guidelines on the offering of private debt securities revised on july which stipulate the criteria that must be met with regard to any issue offer or invitation of private debt securities that comes under the ambit of the cmsa

*malaysian debt securities and sukuk market a guide for issuers investors sophisticated this refers to an individual whose total net personal assets exceed investor rm million or its equivalent in foreign currencies a corporation whose total net assets exceed rm million or its equivalent in foreign currencies based on its last audited accounts and a person who acquires securities as principal for an aggregate consideration of not less than rm or its equivalent in foreign currencies for each transaction
*sukuk these are securities structured to comply with shariah principles which prohibit the charging of interest

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix malaysia s key economic indicators p f population million persons
*per capita income rm usd national product change real gdp at prices

*malaysian debt securities and sukuk market a guide for issuers investors appendix p f balance of payments rm billion goods balance

*an environment of price stability contributes towards a higher level of economic activity and employment by reducing the level of uncertainty amongst economic participants and also reduces the inflation risk premium associated with holding assets over the longer term
*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix monetary policy framework the objective of bank negara malaysia s monetary policy is to maintain price stability while giving due regard to developments in the economy

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix prudential regulation and supervisory framework in maintaining financial stability in the system bank negara malaysia monitors and conducts analysis on the development the financial sector and economic environment detects potential vulnerabilities and risks and undertakes appropriate measures to mitigate these threats and risks to financial stability as well as to prevent and control the building up of excessive risks within the financial system
*the prudential framework will cover governance standards risk management standards capital adequacy standards prudential limits reporting and disclosure standards in addition to other prudential requirements

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix milestones in the development of the malaysian debt securities and sukuk market since the mid s efforts were directed towards promoting a robust domestic debt securities and sukuk market to act as a competitive source of long term debt financing for the economy as well as to provide investors with viable investment alternatives to suit their risk and return profiles

*jul the securities commission malaysia became the single regulator for all fund raising activities following the amendments to the securities commission act the companies act the banking and financial institutions act the futures industry act and the securities industry central depositories act
*malaysian debt securities and sukuk market a guide for issuers investors appendix regulatory framework jul code of conduct and market practices for malaysian scripless securities market under the real time electronic transfer of funds and securities rentas system were introduced

*malaysian debt securities and sukuk market a guide for issuers investors appendix regulatory framework oct universal brokers were allowed to participate in the unlisted debt securities in order to expand market players in the domestic bond market

*may bank negara malaysia issued a revised set of rules on the scripless securities under the real time electronic transfer of funds and securities system and also under the fully automated system for issuing tendering system
*electronic broking system means a stock market established or operated by a licensed money broker for the trading of debentures or bonds of any government body corporate or unincorporated sukuk or any rights options or interest in respect thereof

*this will enable the government to consistently issue new mgs in all market conditions provides flexibility to the government to manage its liability and cater to investors demand for securities of certain duration
*oct a practice note on registration by the securities commission for the purpose of acting as a bond trustee was introduced in view of the important role played by trustees in a debt securities or sukuk issue

*malaysian debt securities and sukuk market a guide for issuers investors appendix infrastructure and institutional building dec setting up of the national mortgage corporation cagamas berhad with the objective of promoting the development of a secondary market in malaysia by purchasing mortgages from primary lenders and issuing debt securities

*malaysian debt securities and sukuk market a guide for issuers investors appendix infrastructure and institutional building sep the primary market auction process for government securities was automated with the implementation of the fully automated system for issuing tendering fast
*mar the government securities auction calendar for the year was announced in line with the government s efforts to develop the capital market in malaysia

*the etp assumes the function of the bond information dissemination system bids which was maintained and managed by the bank as the central database on bond trading information
*malaysian debt securities and sukuk market a guide for issuers investors appendix infrastructure and institutional building dec rentas system was upgraded to include securities borrowing and lending sbl programme module and repo enhancement module

*malaysian debt securities and sukuk market a guide for issuers investors appendix fiscal and financial incentives jan waiver from stamp duty for all instruments relating to the issue and transfer of company bonds which issue has been sanctioned by bank negara malaysia
*jan tax exemption on interest earned by individuals investing in bonds other than convertible loan stock issued by a company rated by rating agency malaysia berhad or malaysian rating corporation berhad

*a tax exemption from the year of assessment until the year of assessment is granted to a person licensed or registered under the capital markets and services act on income derived from dealing in sukuk and advising on corporate finance relating to the arranging underwriting and distributing of sukuk that originate from malaysia and issued or guaranteed by the government of malaysia or approved by the securities commission
*malaysian debt securities and sukuk market a guide for issuers investors appendix fiscal and financial incentives sep establishment of a tax neutral framework for securitisation transactions and a year tax deduction on expenses incurred in the issuance of abs

*malaysian debt securities and sukuk market a guide for issuers investors appendix developmental initiatives sep the issuance of islamic treasury bills to add further depth to the development of islamic securities market
*repo auction of benchmark government securities for pds provide an avenue for pds to obtain government securities if they are caught short in the process of performing market making function

*the introduction of sukuk ijarah reflects the continuous efforts by bank negara malaysia to spur product innovation and the development of products to meet the diversified requirements of domestic and international investors
*publication of indicative ytm on private debt securities based on ratings and selected papers remain on a weekly basis ie on the th th st and end of every month

*the dematerializing of the cps and mtns facilitates simultaneous book entry transfer of securities and funds under the delivery versus payment principle thereby eliminating the risks of settlement and non delivery of securities
*the introduction of this new product would improve product diversity and further develop the malaysian bond market particularly the primary market for corporate bonds as callable mgs may serve as a benchmark for private sector issuers to price their own callable mgs

*with the implementation of dvp the delivery of the malaysian issued us dollar securities that are deposited with rentas will be made simultaneously with its corresponding us dollar payment thus eliminating the settlement risk associated with the trading of securities in malaysia
*apr further liberalisation of the foreign exchange administration rules to allow residents and foreign issuers to raise foreign currencydenominated bonds would provide flexibility for both residents and foreign investors to diversify their investments in malaysia

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix list of guidelines issued by bank negara malaysia that relate to the debt securities and sukuk market
*guidelines on securities borrowing and lending sbl programme under rentas december note the list of guidelines mentioned above is current as at the date of this publication

*guidelines on the minimum contents requirements for trust deeds july also applicable to the offering of islamic securities note the list of guidelines mentioned above is current as at the date of this publication
*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix list of guidelines on the debt securities and sukuk market issued by the securities commission malaysia

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix market convention in the malaysian debt securities and sukuk market

*trading convention general market rules securities trading basis standard standard amount value date bnmns and mtbs yield rm mil t tom discount based bnmns coupon profitprice rm mil t spot based floater mgs gii and khazanah price rm mil t spot conventional pds price rm mil t spot sukuk price rm mil t spot
*pm trade date before noon after noon settlement after the cut off time on the same value date is considered a delayed payment while settlement not executed by the close of the business day on the value date is considered failed

*issue date and tender date government and bank private debt securities negara malaysia papers tender date issue date tender date issue date expected holiday unexpected holiday falls only adjust fall on only adjust issue date first interest issue date first interest payment payment interest adjusted interest adjusted if both tender and issue dates are unexpected holidays both dates shall be with adjustment on tenure and calculation on proceeds
*holiday convention interest payment and redemption date government and bank private debt securities negara malaysia papers interest redemption interest redemption payment payment expected holiday but if month end unexpected holiday interest unadjusted interest adjusted month end rule applies if the holiday declared on the last business day of the month in which case the new value date will be the working business day prior to the month end

*standard amount standard minimum instrument amount amount spot ringgit usd usd million spot eur usd eur million spot other currency usd usd million ringgit swap usd million overnight tom next spot next usd million other tenures usd million ringgit inter bank deposits rm million rm government bonds cagamas rm million t bills bnmns cagamas notes rm million bankers acceptances rm negotiable instruments of deposits rm million short term commercial papers rm million private debt securities rm million repo rm million rm retail transactions rm rm
*malaysian debt securities and sukuk market a guide for issuers investors appendix

*hong leong islamic bank berhad
*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix list of principal dealers and islamic principal dealers a

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix list of financial institutions financial institutions are the key players in the bond market in bond origination and secondary market trading
*bank of tokyo mitsubishi ufj malaysia berhad

*united overseas bank malaysia berhad islamic banks
*malaysian debt securities and sukuk market a guide for issuers investors appendix commercial banks

*midf amanah investment bank berhad
*malaysian debt securities and sukuk market a guide for issuers investors appendix islamic banks

*bank perusahaan kecil sederhana malaysia berhad sme bank
*malaysian debt securities and sukuk market a guide for issuers investors appendix development financial institutions

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix list of money brokers there are currently six money brokers in the malaysian market in charge of arranging deals between two or more approved interbank institutions
*money brokers may also arrange deals between banking institutions and foreign counterparties in the international money and foreign exchange markets

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix list of recognised credit rating agencies the recognised credit rating agencies pursuant to the practice note on recognition of credit rating agencies by the securities commission malaysia for the purpose of rating bond issues are as follows effective date no
*level the gardens south tower note mid valley city credit rating services were lingkaran syed putra transferred from ram holdings kuala lumpur berhad formerly known as rating agency malaysia berhad business address to ram rating services berhad suite

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix list of registered trustees for debt securities and sukuk issues the list of trustees registered with the sc pursuant to the practice note for the registration by the sc for the purpose of acting as a bond trustee is as follows effective date no
*bhlb trustee berhad registered address a th floor bangunan cimb january jalan semantan damansara heights kuala lumpur business address level wisma amanah raya berhad jalan semantan damansara heights kuala lumpur tel fax

*equity trust malaysia registered address berhad suite th floor january w menara keck seng jalan bukit bintang kuala lumpur
*malaysian debt securities and sukuk market a guide for issuers investors appendix effective date no

*name contact details of recognition business address suite th floor menara keck seng jalan bukit bintang kuala lumpur tel fax website
*malaysian debt securities and sukuk market a guide for issuers investors appendix effective date no

*amtrustee berhad registered address v nd floor april bangunan ambank group jalan raja chulan kuala lumpur business address th floor bangunan ambank group jalan raja chulan kuala lumpur tel fax
*deutsche trustees registered address malaysia berhad level menara imc october h jalan sultan ismail kuala lumpur business address level menara imc jalan sultan ismail kuala lumpur tel fax

*malaysian debt securities and sukuk market a guide for issuers investors appendix effective date no
*name contact details of recognition business address tingkat wisma tas no

*malaysian debt securities and sukuk market a guide for issuers investors appendix appendix tickers bloomberg reuters malaysian debt guide a my debt government securities ticker search a govt tk go a my govt specific securities a mgtb govt go a mgs govt go a malays govt go a bnmb govt go a bnmni govt go a bnnn govt go a caga govt go a mgii govt go a mitb govt go a sbnmi govt go a bnmn govt go abf malaysia etf a mbif mk equity go a betf
*kl contributor prices yield islamic capital markets a mkis go a my islamic a islm go a mysukuk a ni islmfin go a srch go a nim go a leag go a fsrc go a suku go a ycrv go

*billion musyarakah first rated islamic residential mortgagermbs backed securities pg municipal assets berhad first profit sharing sukuk mudharabah in rm million sukuk mudharabah malaysia and first structured transaction backed by collections of property tax musyarakah one capital berhad rm

*billion sukuk and a malaysian corporate to date usd billion bond

*pm reinvestment of interest and principal payments earned by the returns universe are reinvested in cashflows the index on the day of scheduled principal and coupon dissemination new issuances qualifying securities issued are included in the returns universe on the day of issuance in the secondary market sub indices all sub indices index history nov bpam ringgit bond index introduced with historical data backfilled to jan contact general enquiries enquiries bpam dot com


 ''Please note, This is an auto generated summary based on sentances position in the document and other factors''
== DOCUMENT WORD ANALYSIS ==
=== Main Category ===
: AlHuda Material\sukuk islamic


=== KeyWords ===
sukuk issu secur debt malaysia investor issuanc islam bond issuer corporate billion governance malaysian rate structur bankable institut developed convention



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== DOCUMENT REFERENCES ==


=== Number of Pages ===
148


=== Published Date ===
2009-11-12 05:25:56


== Full Document ==


[https://www.hodhood.com/en/HodHoodDocuments/IslamicFinance/SukukIslamic/Malaysian%20Debt%20Security%20and%20Sukuk%20Market.pdf Read the Full Document]


[[Category:Islamic Finance]]

[[Category: Sukuk Islamic]]