How to buy bonds?

Malaysia’s Government Bond Market

Corporate Debt Securities

Malaysia’s Government Bond Market

Government Debt Securities at issue

After Issue and at Maturity

Selfservice Options

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Choosing Type of Securities to Buy

Bank Negara Monetary Notes (BNMN)
Issued by Bank Negara Malaysia for managing liquidity in both the conventional and Islamic financial market.

Malaysian Treasury Bills (MTB)
Unsecured Bills issued by Government on a discount basis.

Malaysian Government Securities (MGS)
Unsecured securities issued by Government that requires minimum 10% bid in multiple of MYR.

Government Investment Issues (GII)
Unsecured Islamic bonds issued by Government based on Islamic principles ( Bai’ Al-Inah)

Sukuk Bank Negara Malaysia Issue (SBNMI)
Zero coupon bonds that need a special purpose vehicle to facilitate primary issuance.

Check the Conditions

Check Tender Dates
Bank Negara Malaysia will invite tenders before the issue date through Fully Automated System for Tendering (FAST). Auction details are normally announced 2 weeks prior to auction date. All relevant information is posted on FAST.

Submission of Bids
All government debt securities are offered to Principal Dealers (PDs) via competitive auction. PDs are invited submit bids directly to FAST.

Procedures

Interested investors place orders for Government securities through Bank Negara Malaysia-appointed Principal Dealers (PDs), who charge varying fees for their services. PDs normally require investors to maintain a cash account and a securities account for settlement of bond trades. Bids submitted must be in amounts that are multiples of MYR1 million. For further information, investors may contact the PDs listed below: AmMerchant Bank Berhad Bumiputra-Commerce Bank Berhad Citibank Berhad Commerce International Merchant Bankers Berhad Hong Leong Bank Berhad HSBC Bank Malaysia Berhad Malayan Banking Berhad Public Bank Berhad RHB Bank Berhad Standard Chartered Bank Malaysia Berhad

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Results

Award Mechanism/Confirmation
For competitive bidding, tenders are sorted in order of yield (lowest to highest) or price/100 (highest to lowest) and amount of bid. This order is used to allot securities to bidders until the issue is fully subscribed.

Settlement
Tender results are interfaced with Malaysia’s Real-time Electronic Transfer of Funds and Securities (RENTAS) for securities allotment and funds transfer. On the issue date, Principal Dealers' securities accounts are credited with the new bonds, while their cash accounts are debited for the price of the securities purchased. Principal Dealers have various procedures for settlement with clients. Normally, they debit a client's deposit account while crediting the client’s securities account.

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Buying and selling on the secondary market

An investor can either hold a security until maturity or sell prior to maturity at the current market price. Investors can also buy bonds already issued. Government securities are traded over-the-counter (OTC) in the secondary market. Investors trade through bond dealers. Bond dealers are financial institutions licensed by the Securities Commission to trade bonds for their own or client accounts. Investors place orders with dealers at the price and amount they want. Different types of orders can be placed. Order fulfillment depends on whether the order can find a buyer or seller on the OTC market. The standard market lot for government securities is MYR 5 million. Banks maintaining their own bond inventory usually provide their market bid or offer price to clients. Quotes are price/100 or yield to maturity of the bond.

Payment of Interest and Redemption

Payment of Interest
Bondholders receive interest through their cash accounts with Authorized Depository Institutions (ADIs). On interest payment dates, the paying agent uses the Real-time Electronic Transfer of Funds and Securities (RENTAS) system to credit the ADI of the security holder. The ADI then credits the cash account of the securities holder. There is no ex-date trading under the RENTAS system. Interest payments are done at the end of T+1 (one day following the transaction due date). Calculation of interest, accrued interest, and redemption proceeds are available in Part IV of the Rules on the Scripless Securities under the RENTAS System, published by Bank Negara Malaysia.

Redemption
RENTAS handles the redemption process on the redemption date by debiting and crediting the securities and cash accounts of the ADI of the security holder. The ADI then credits the cash account of the securities client.

Reopening Issues

To increase liquidity, existing government issues are reopened. Reopenings are the offering of new securities with the same terms and conditions as an existing issue. They are used to increase the size of an outstanding issue. A reopened bond has the same maturity date, security identifier, and coupon rate as the original security. The only difference is that they have a different issue date and usually, a different purchase price based on current market yields.

Self-Service Options

Bond Calculator

Brochures & forms

Investor Contact Center

Bond Calculator
Basic bond calculators illustrate the various relationships between price, yield, coupon rates, and maturity dates, utilizing the mathematical pricing conventions common in the market. Users can input the details of a security, such as yield, coupon and maturity to derive market price or they can input market price, coupon, and maturity date to derive yields.

Brochures & Forms
For government Debt Securities, there are no online forms investors can use to directly buy government bonds. For primary issues, forms, and other requirements, the Fully Automated System for Tendering ( FAST ) is used. The Malaysian Investor, a Securities Commission of Malaysia site for retail investors, provides helpful guidelines for investing in Malaysian capital markets and in bonds specifically.

Investor Contact Centers
Bank Negara Malaysia (BNM) BNM Ringgit Bond Market

Corporate Debt Securities

Corporate Debt Securities at Issues

After Issues and Maturity

Self-Service Options

Choosing the Corporate Securities You Want to Buy

Cagamas Instruments
issues by Cagamas Berhad and the instrument include Cagamas Notes, Cagamas Bonds, Sanadat Mudrabahah Cagamas and Sanadat Cagamas.

Commercial Papers
issues by Malaysia Corporation and the instrument include Conventional Commercial Papers and Islamic Commercial Papers.

Medium Term Notes
issues by Malaysia Corporation and the instrument include Conventional Medium Term Notes and Islamic Medium Term Notes.

Private Corporate Bonds
issues by Malaysia Corporation and the instrument include Conventional Private Debt Securities and Islamic Private Debt Securities.

Khazanah Bonds
issues by Khazanah National Berhad, a Government holdings company, issues these unsecured zero coupon bonds under the Islamic principle of Murabahah and the instrument is Khazanah Bonds.

Check the Conditions

Check Tender Dates of Notes/Bonds
Cagamas bond auction details are usually announced at least one week prior to auction by Cagamas Berhad. Forthcoming tenders for the other forms of corporate and Islamic bonds are posted at least three business days before the tender date.

Check Corporate Bond Ratings
Local private debt securities, asset-backed securities, and Islamic debt securities must be rated by either the Rating Agency Malaysia (RAM) or the Malaysian Rating Corporation (MARC).

Determine which Type of Bid to Submit
Cagamas bonds are issued by tender, with Principal Dealers (PDs) required to participate via competitive auction. Allotment is decided by highest bid. Cagamas bonds are quoted on an annual yield basis. Investors apply to dealers to bid on their behalf. All types of corporate securities are issued by auction or through private placement. Investors interested in buying new bond issues should contact designated bond dealers for details on subscription procedures.

Application Procedure

Investors wishing to buy Cagamas Instruments place bond orders through appointed Principal Dealers (PDs), which charge various fees for their services. PDs normally require investors to maintain a cash account and a securities account for settlement of bond trades. Investors may contact The Primary Dealers for Cagamas Debt Securities. For Commercial Papers, Medium Term Notes, and other corporate bonds, investors may approach primary subscribers who will later apply fees for underwriting services.

Results

Award Mechanism/Confirmation
FAST generates general results accessible to the public, and individual results for bidders. Allotments go initially to the PD accounts. PDs then distribute client bids and advise customers of bid results. General tender results are published by FAST and Bank Negara Malaysia (BNM). Tender results for Islamic bonds are also published by BNM.

Settlement
Principal Dealers or approved dealers have various procedures for settlement with clients. Normally, they debit a client’s deposit account while crediting the client’s securities account.

After Issue and At Maturity

Buying and Selling on the Secondary Market

Payment of Interest and Redemption

Buying and Selling on the Secondary Market
An investor can either hold a security until maturity or sell prior to maturity at the current market price. Investors can also buy bonds already issued. The corporate bond market in Malaysia is largely over-the-counter (OTC). Buying and selling conventional and Islamic bonds is done by telephone or other electronic means between bond dealers and investors.

Payment of Interest and Redemption
Bondholders receive interest through their cash accounts with Authorized Depository Institutions (ADIs). On interest payment dates, the paying agent uses the Real-time Electronic Transfer of Funds and Securities (RENTAS) system to credit the ADI, which then credits the cash account of the securities holder. On the redemption date, RENTAS handles debits and credits the securities and cash accounts of the ADI of the security holder. The ADI then credits the cash account of the securities client.

Self-Service Options

Bond Calculator

Research Center

Investor Contact Center

Bond Calculator
Basic bond calculators illustrate the various relationships between price, yield, coupon rates, and maturity dates, utilizing the mathematical pricing conventions common in the market. Users can input the details of a security, such as yield, coupon and maturity to derive market price or they can input market price, coupon, and maturity date to derive yields.

Research Center
AsianBondsOnline is a one-stop clearing house of information on sovereign and corporate bonds. It contains essential data on current market activities, the legal and regulatory framework, and government policies and initiatives affecting the market. Investors may also refer to FAST and the Ringgit Bond Market websites of BNM. Bond Pricing Agencies (BPA) in Malaysia provides daily fair value prices of all MYR-denominated bonds traded in the OTC market. Investors may refer to Bondweb.com, the first appointed BPA in Malaysia.


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Investor Contact Center
Bursa Malaysia Marketing Communications Bhd Bank Negara Malaysia RHB Sakura Merchant Bankers Berhad Commerce International ABN AMRO AmMerchant Bank Bhd