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 Retail Bank Bond, Risk statement interpretation

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ikanbilis
post Apr 30 2016, 12:05 AM

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QUOTE(guy3288 @ Apr 29 2016, 11:26 PM)
Yes, this is ridiculous!!!
How can banks be allowed to default bond payment and still not declared  bankrupt??

In future who wanna buy bank bonds, who is going to lend money to banks??
Why in the world Financial regulators adopt this lopsided policy?.

If banks with so many experts in them are doing losing business it should be punished -go close shop!
Why  at the expense of investors who only provide capitals and have no say in how they run their business?
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Thanks to you for starting this thread and havoc's explanation, we now know the risks and rewards of this type of bond. But there are many more non-savvy retail investors who might fall into this without knowing the greater risks for a small incremental rewards. I presume your RM will have a cut since she is pushing hard to sell you this bond??


strace
post Apr 30 2016, 12:01 PM

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hah, i know some of these words.gif when coco bond was mentioned
afaik in europe these coco bonds are somewhat junk now, ecb was planning to buy them because some of these troubled banks has (i assume) massive credit exposure to o&g sectors because of crude oil prices
Havoc Knightmare
post Apr 30 2016, 12:34 PM

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Just to add a little more details:- banks are issuing these bonds to meet regulatory requirements under Basel III rather than to screw investors. Given a choice, banks would rather not issue such debt because it is expensive (6% in this case). It is supposed to make banks "safer", but results in generally lower profitability.

Given the recent interest in Cocos, I will consider writing a guide on this asset class biggrin.gif

This post has been edited by Havoc Knightmare: Apr 30 2016, 12:35 PM
cheahcw2003
post May 1 2016, 10:46 AM

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QUOTE(guy3288 @ Apr 28 2016, 09:11 AM)

Between ASX and this, dont know how to choose, if not for wanting to diversify,put all in ASX better.

Hope can decide after listening to more views here.

Can help summon some like  gark here to comment? Thanks
ps:edited to cut out source.
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I can see you contribute in ASx thread as well, and you are also the investor in properties, as well as retail bonds.

My personal opinion is with most of the taikors here, i.e.,

Asx or Bond funds/UT are still better. As both pay above 6%. For Bond funds, there are some bond funds in the market which can pay above 6-7% p.a. with 10 years track records. Moreover, bond funds are lower risk, minimal fees (no upfront charges), and offer liquidity you can cash out anytime.

Relationship manager is still a relationship manager, their job is in selling, they make a small commission from the products you buy. Most RM are young, in their late 20s to early 30s and just an employee, you can ask if any of them made their first RM500K from the investment?.

My logic is : do not get the financial advice (referring to RM) who is 1000x poorer than you. Get advice from someone richer than you.

 

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