Can I check for these perpetual bonds, if you need the cash then you sell in secondary market? Is there a secondary market to sell such bonds?

Yes, but you'll be subject to market rates & a spread (profit for the middle man) when you sell the bonds.

Check this Bond IPO on FSMOne 👀
DRB-Hicom Perpetual Non-callable 5Y Potential New Issuance (updated!)

https://www.fsmone.com.my/bonds/ipo/factshe...reLaunchId=3405

price much cheaper there.
only problem if quarterly fees, if hold long would be more expensive
and sell back more difficult

buy from bankers no problem sell back
may even profit eg price now RM104
no exit fee

Yes, you are largely correct, but even if you buy from bankers, they’ll still take a spread when it’s time to sell.

My bond buying tactic involves writing off that bond from my current account balance sheet and transferring the value over to an illiquid asset sheet (as I’ve alluded to previously in a separate posting) - essentially, my bonds are for keeps, regardless of how high or how low the value goes in the market. I’m only after the coupons.

yeah i buy bonds for their coupons too, money dumped in i dont expect to need it again before maturity..... still cant say write off lah..
as that should mean the bond has become no value aka burnt.

Most of my bonds were called back at 5th yr and i always get my money back.
Write off means cant back the money anymore.

Just like FD matures, cant say we write off that FD right?

So far i sold my bond once only, and no exit fee. Affin Hwg Single bond bought @0.93-0.97 in 2020 when HSBC HK was in trouble...sold at RM1.05 in 2021 for a tidy 9% capital gain on top of the 3 monthly 6.5% coupons..But that was a BBB bond!

Currently Tropicana got some bad news , the price is RM99, my RM telling me to sell and buy another.........i hate to sell at a loss. Coupon 7% some more...take the risk keep. Ada untung can sell lah.. takda untung i dont need the money.

Yes, you are correct. I meant to say I move it off the books, not write if off as a loss. Thanks for the chance to clarify.

i just reconfirm with my RM, sell back my bonds memang no spread added
ie no fee

You kena fees before ?
how much was the spread incurred from selling price ?





Attached thumbnail(s)

Actually you don't know...

only way to know for sure is you have another person ask the same RM whats the price if that person wants to buy.

bond prices are not really transparent because they are all done OTC, ie not at a proper exchange like bursa.

I know what you mean

You mean to say if i sell back to bank at RM99 and another buyer come buy at RM102
fees has been incurred to me.

Is that what you wanted to say?

yeap.... the 99-102 is the bid-ask spread.

bankers never do things for free....

sure lah
How can we expect bank buy back from me RM99 to sell at same RM99 ?

the spread could be buying fee
even if no selling fee ...knowing at what price the buyer buy still
not enough

must work in treasury baru boleh tahu .

it seems everyday there is a price list
so is actually not that opaque...
i doubt they can suka suka add RM2 to
the price list and sell as you alleged.

may be others can find out true or not
buyers pay the fee
sellers dont.

actually they can. that's why it is called OTC.
anything that is not traded on an established exchange, the price discovery is not efficient and many times simply decided by traders.

Don't just say suka suka 2rm... even 5rm also can.

btw, bid-offer spread are not fees. Fees is basically a amount or % of some value that is disclosed to you, on top of whatever transaction value you performed, and need BNM approval. (just clarifying the difference between fee and spread)

This post has been edited by Wedchar2912: Jul 30 2023, 08:21 PM

Spot on. Thank you for helping me to explain. Was busy watching Liverpool score 6 goals against Leicester City (2 were offside, so the final score was 4-0) in a friendly match at the Singapore National Stadium earlier.

You sounded like you have knowledge in internal running of bonds
you worked in banking bonds before?

but still i cannot fathom how...

1)once the bond is issued there is daily price movements that
customers can view before buy or sell.
And the spread is rather fixed
not much different from Bursa also
except it wont change every few minute lah.

2) i doubt they can suka suka pushing up selling price additional RM5 without also
pushing up the equivalent amount for buying price.

3) So in an attempt to profit from buyers sell at extra RM5.00,
the bank would inadvertently put itself at risk of overpaying
seller also for same extra RM5.00

4) If they play dirty, imagine buyer found out later
as many bonds we can buy sell from other bankers also.
i doubt the banker willing to take that kind of risk of getting a bad name.


The spread is not considered fee
ok.
How about the buying price eg new launch PAR value RM100
i have to pay RM102 for it

Isnt the extra Rm2.00 the 2% buying fee as they said to me.
so when i sell it is only fair that they go charge the new buyer

correct me if i read you wrongly

you are saying buy and sell same investment grade bank bond on same day,
the price difference from one buyer to another can be as high as RM2 to RM5?

I dont believe it,
never in my experience

This can easily be checked with the various banks

I have found out price diference is small some RM0.20 +-

I dont believe it is that unregulated till can simply hantam sell at RM5.00 higher
unless that banks dont bother about its reputation

Remind you we are not talking about traders
we are talking about buying bank bonds from banks.

Malaysia bond market is considered very illiquid, with exception of govies.
So the spread you noticed is basically made up by the bank that is servicing you. And usually, not always, the other side of transaction is the bank itself (represented by the trader). And because of this, it is possible for bank A and bank B to quote you different price.
(except for buying, this different price is useless when you want to sell because your bond is being custodized with the bank you purchased at start).
Bursa is a stock exchange, and by right, all publicly listed equities in Malaysia must trade via the exchange, with certain exceptions. This price is transparent for all to see.

Btw, I doubt it is written anywhere by the bank that the bid-offer spread must be 2? Just like fx, which is a lot more liquid, at times of market uncertainty, the spread for FX widens like mad.
2 and 3 imply spread is fixed. It is not. and neither is real fair value of the bond needs to be within the bid-offer prices.

4 is the most interesting part. How often do clients really shop around? (even changing physical foreign currency also people don't really get the best price) Once you purchased a bond from a particular bank, you have to sell that bond back to them. Unless you transfer said bond out. Plus, its not that easy for a client to shop around unless they are premier clients of a few banks.

Btw, you have also answered your own question about why the price is 102 for a IPO. The convention is that all bonds are issued at PAR (ie only the coupon is varied for each issuance), so by right you should be subscibing to the bond at 100 bucks.
Occam's razor: the bank slapped extra 2 bucks on top of the real offer price, which is 100.

edit: forgot to mention. If the extra 2rm is "buying fee", then in your statement it should spell out fee. Its like you purchase Maybank shares at 9.00, but got small items called this and that fee.

This post has been edited by Wedchar2912: Jul 30 2023, 10:49 PM

no no... don't focus on the 2 or 5rm. It is just a number, which is also the point.
You mentioned the spread is 2rm; so I am just saying it is not a fixed number. It is all up to the bank.

you just noticed 2 rm because the bonds are too short tenor.... if the bond is like a 20 year bond, then the spread can easily be wider.

yeah, I know we are talking about retail banks in Malaysia. When you buy bonds from banks, whom you think is quoting you the price in actual reality? Its the traders sitting in the banks.
Reputation is not that valuable, in case you didn't realize yet.

lesson of the day:

look at the yield you will get from your transaction price plus fees.

why? because prices can be manipulated, even with zero fees, leading to potentially lower yield in the end