Bond & Sukuk


DanaInfra Nasional BerhadDanaInfra Nasional Berhad is issuing second Retail Sukuk which will be listed and traded on Bursa Malaysia on 28th November 2013. The maiden Retail Sukuk raised RM300 million issued on Feb 8 this year recorded an over subscription rate of 1.61 times.

Size of the second DanaInfra Retail Sukuk is RM100 million with 15-year maturity date. The Sukuk is an infrastructure issuance to finance the capital expenditure and operating expenses in relation to the development of the MRT Project.

The profit rate for the second DanaInfra Retail Sukuk is 4.58 percent per year. Profit payment will be paid semi-annually and not taxable.

The table below is the key point of DanaInfra Retail Sukuk.

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Bonds RiskThe common misconception is that Bonds and Sukuk have little risk. This is not true. Just like any other financial instrument, they have certain inherent risks but these can be reduced by diversification across other asset classes:

  • Credit risk -also known as ‘issuer risk’ or ‘default risk’. Risk that the issuer may not be able to meet its obligations in terms of coupon payments or may not be able to pay the principal amount back to the bondholder at maturity. Government bonds are generally considered default-free, while corporate bond risk is measured by Rating Agencies.

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DanaInfra Nasional BerhadAs highlighted in September 2012 regarding Bond/Sukuk for Retail, DanaInfra Nasional Berhad will be the first issuer to the Exchange Traded Bond and Sukuk (ETBS). It will be listed and traded on Bursa Malaysia on 8th February 2013. This product is known as DanaInfra Retail Sukuk.

The size of DanaInfra Retail Sukuk is RM300 million with 10-year maturity date. The Sukuk is an infrastructure issuance to fund the initial tranche of the RM1.5bil for the first phase of the MRT Kajang to Sungai Buloh line.

The minimum profit rate for DanaInfra Retail Sukuk is 3.70 percent per year The final profit rate will be notified prior to listing date. Profit payment will be semi-annually and not taxable.

The table below is the key point of DanaInfra Retail Sukuk.

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Recently, Securities Commission Malaysia (SC) launched the Malaysian retail bonds and sukuk framework that allows retail investors to directly invest in bonds and sukuk. The framework is part of the initiative under the SC’s Capital Market Masterplan 2 to facilitate greater retail participation in the bond and sukuk market.

The retail bonds and sukuk framework is intended to meet retail investors’ demand for access to a wider range of investment products. Issuers will now also have access to a larger pool of investors.

The framework will come into two phases,

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investments

We always heard that many people are saying high risk investment come with higher return. But how do we know which investments have higher return with higher risk and vice versa.

There are 3 level of investments risk namely conservative, moderate and aggressive with potential return ranging from 3 percent and up to 20 percent. The most commonly type of investments from lowest to highest potential returns are government securities, fixed deposits, bonds, investment linked insurances, equities and options/warrants.

The chart below illustrates the risk and potential return of the common types of investment products.

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