This has to do with incentive for the RMs/banks to offer to their clients. The fee cannot be too high (obviously, cos investors will not buy anymore) but it cannot be too low: RMs won't even bother to sell or show their customer base. UT and other products are providing 1 to 2% upfront fee to the bank, and some of them even provide trailers to the banks.

You should look at the YTC of the sukuk to see if it is still attractive.
edit: ie, in case not aware, you should also factor in the 2 dollar depreciation when called.

This post has been edited by Wedchar2912: Jul 27 2023, 08:54 PM

Different environment and different segment as well, I guess.

Private banking channel usually get rebates for IPOs, up to 50 cents. So called to incentive the channel to sell to their clients. FI buyers don't get them usually.

For retail segment, I heard that some banks cheat a bit and the retail side put in their orders together with the private banking side to take the 50 cents. And at the same time, retail side will add the 2 bucks extra fee...

yum yum...

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.

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

bankers never do things for free....

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

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.

lol. I thought I was doing you a favor by sharing proper knowledge. Unfortunately, not only is it not appreciated, I sense some hostility, which I do not understand.
So, no point wasting my effort and in the same time, get your agitated for no reason. I do not simply talk nonsense when it comes to financial products, as all my old posts can clearly indicate.
A little knowledge can be a dangerous thing bro. But you can ignore everything I mentioned in this tread and sure, you are very right in saying the 102 price is due to a FEE by the bank.

(btw, FX is supposed to be quite simple, and yet there are so many who thinks the price on google are the tradable prices. Just an example of what normal people knows.
and regulation doesn't mean prices are regulated. you are mixing things up)

Do not get confused with the meaning of regulated.

Just an example:
Medicines are also regulated, but are the medical drug prices really regulated? Panadol must be 2rm per tablet?

Oh well... Just ignore everything I wrote since you feel so bad about it.

I kinda regretted sharing too much industry secrets.

edit: remember your post 36? didn't you wanted to know whats going on?

This post has been edited by Wedchar2912: Aug 1 2023, 08:11 PM

The conditions are of "or" logic/statements... you just need to satisfy one of them. So the easiest is maybe is the condition 3 (1 sgd million).

great analysis and dissection.

the yield does look rather low, even though it is for ringgit risk free.
May as well throw extra money into EPF... similar risk if one has the means to take the money out after 14 years.

if you managed to get it at PAR value.... then yes of course.
Also don't know if the price indicated is a tradable price. Hopefully it is.

really? but many bond investors will say that malaysia's bond market is efficient and liquid... ...

I think you meant bond price going downhill....

Market is pricing increased risk on the bonds. On the callability I guess.

well, the only way to test whether the price is being manipulated (assuming too cheap) is to hit the price and see if they honor the deal. that's how price discovery work.

edit: btw, i don't mean to ask you buy more of the bond. that's not my intention. i am just describing the standard method to check if the price is real.

This post has been edited by Wedchar2912: Feb 13 2024, 10:41 PM

This is what illiquidity means, and that bonds are traded in the OTC market. As much as Bond Express is trying to make itself like a exchange, it is not. It is just a platform. The other "platform" the retail banks and buy via your fav RM.

Prices presented as 92.0/93.5 is the bid/offer price on the platform. No transactions at these levels indicate illiquidity, and in some sense, is the market price on this platform. If a investor feel it is good value, then he should just hit the 93.5 price and get his bond. In fact, if this investor have enough money and risk appetite, he can keep on buying the bonds until FSM platform runs out or until the price shifts higher.
Conversely, if a existing investor is desperate and willing to sell his bonds at 92, he should just throw.

The other part is a market structure issue, which maybe you would know.
Similar to Brk-A convertible to Brk-B (and then to -C) but in reverse, would you know if the small lot size can be grouped together to form the standard lot size of 250K rm? I suspect it is not possible and hence this creates a weird dual pricing.
(like you said, there were transaction of 250K rm at 91, which suggested someone can break the standard lot to small lot and try to earn the 2 bucks. It is just a guess and no way to find out except to ask some insider in FSM).

Nonetheless, looking the transactions, even the full lots are traded below par, with 6 months away for the callability. Investors are not fully convinced that the issuer will call back the bonds. I also think this bond don't have cumulative deferral feature. Just my guess.


This post has been edited by Wedchar2912: Feb 14 2024, 12:19 AM

contestchris was referring to the small lot prices, which is 92/93.5. the full lot prices do look normal in the sense that it is above par...

ah ok, then I agree with you... definitely got cause to complain to SC... cos terang terang display 93.5 as live price. that is outright lying.





edit: only after you mentioned, did I realize that even the website is not truthful... i thought 93.5 price is live ask price, but with zero volume... can only see the zero volume after clicking.

This post has been edited by Wedchar2912: Feb 14 2024, 12:28 AM

no lar... like the name suggested, it is a perp, with a callable feature. The call sits with the issuer.

issuer not calling it is not a bankruptcy event, as it is specifically allowed in the mandate.
This bond have dividend covenant? if got, then maybe not so bad.