Introduction of Malaysia Bond Market

Bonds require a minimum amount of money to purchase and a minimum length of time to hold on to the bond.

| |A bond debenture is a legal document that details all of the conditions relating to a bond issue. |

Typically these types of bonds are voted for (approved) and paid back by the local community (known as voted indebtedness); payments are collected with

Public bond: provides more money than other means, with more maturity, but has a negative carry.

A bond is a "security" which gives the holder a financial claim on the issuer. This claim protects the holder in circumstances in which the issuer is unable to pay the amount due. It is made formal by the "trust indenture", a legal document, which specifies all of the bond's features and the legal rights and obligations of all the parties to the agreement (http://www.finpipe.com/bndchar.htm).

if possible, begin this lecture by showing students an actual bond certificate. We show a real coupon bond with physical coupons. These can no longer be issued--it is too easy to evade taxes, especially estate taxes, with bearer bonds. All bonds today must be registered, and registered bonds don't have physical coupons.

Along with the many different characteristics of bonds such as, the way the pay their interest, the market they are issued in, the currency they are payable in, protective features and their legal status. Bond issuers may be governments, corporations, special purpose trusts or even non-profit organizations. Usually it is the type of issuer or the particular nature of a bond that sets it apart in its own category.

Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is sold.

Debt securities include very debt tool that is available for buying and selling inside two groups and have understanding of some common terms like the notional amount or also known as the borrowed amount, maturity or renewal date and interest rate. Debt securities involves corporate, government and municipal bonds, CDs, collateralized securities ( like CDOs, CMOs, GNMAs) and zero coupon securities. (Investopedia, 2015). On the financial records, the debt securities are documented in the type of bonds, collateralized securities and preferred stocks.

First, most banks and insurance companies had insufficient capital holdings to back the financial commitments that they were making. The whole financial system was built on unstable foundations. Banks had allowed their balance-sheets to expand but set aside too little capital to absorb losses.

There have been few financial crises in the United States. The Global Financial Crisis of 2008 to 2009 was the most recent and before that was The Great Depression of the 1930s. The Global Financial Crisis actually began in 2007 when prices of homes tanked. It not only affected the U.S. but it also affected economies overseas. The entire investment banking industry, some of the biggest insurance companies, enterprises government used for mortgage lending, top mortgage lenders, the largest savings and loan companies, and two of the largest commercial banks were many of the financial sectors affected by the crisis. “Banks stopped making loans, share prices plunged throughout the world and most of the world plummeted into a recession” (The Financial Crisis of 2008: Year In Review 2008,” 2009, para. 1).

The recent Global Financial Crisis (GFC) initially began with the collapse of credits and financial markets, which caused by the sub-prime mortgage crisis in the US in 2007. The sub-prime mortgages were given to high-risk lenders (with bad credit history) who were in danger of defaulting, which eventually caused a global credit crunch, where the banks were unwilling to lend to each other. In October 2008, the collapse of the major financial institutions and the crash of stock markets marked the peak of this global economic slowdown (Euromonitor International, 2008).

During this time, the banks were robed out of any liquidity. BNP Paribas, a major bank of U.S had to sell its hedge funds to get in some cash. Excessive risk taking by these banks robbed the capital out of the system. Many major banks failed at this time. Even, the banks which were given the status of ‘Too Big to Fail’ also witnessed a major collapse, ruining the financial health of the institutions. Furthermore, the Federal Reserve too granted loans and aid packages to bail-out these banks, which led to magnify the world financial system and the health of the U.S economy. An Expansionary fiscal and monetary policy was adopted.

Bonds are long-term debts that are issued by government and corporations with financing requirements. In corporate bond market, which is the largest source of capital for the companies, bonds are all issued by corporations. The bond market has contributed to the direct debt financing and price discovery. The corporate bond market is constituted with the primary market (issuing) and secondary market (trading). The trading in corporate bonds helps to reveal the credit risk premium. In corporate bond market, the risk is considered to be higher than the government bond and as a result always a higher interest rate. Rating of these corporate bonds range from AAA to unrated can help investor to make their decisions. But in general, most of them have an investment-grade () rating. The apple Swiss francs-denominated bond was rated at AA+ (by S&P), which was only one notch under the highest AAA rating. Because Apple Inc. has a

Another example of a financial crisis that occurred in the BRC economies was the 1997 Asian Financial Crisis. This financial crisis differed greatly from the Latin American Crisis, as this financial crisis entailed a speculative attack on a currency . Defined, a speculative attack on a currency is a devaluing of the exchange rate brought upon by a large sell off of a country’s currency. In the late 1980s and early 1990s, Thailand and other Asian countries had experienced growth due strong trade flows, which lead to an increase in most asset classes. Accompanied with high-interest rates(Figure 5), foreign investment flowed into the Asian regions. Taking advantage of the high-interest rates, Thai banks had started to accumulate large