Essay about Bond : A Source Of Finance

758 Words Mar 9th, 2016 4 Pages
On the other hand, bond also act as a source of finance. The bond is one of the debt securities (debt instruments) which issued by issuer and sell it to the investors. The bond will act as a loan whereas the issuer is the borrower and the investor is the lender, the coupon is the interest. (Certified Financial Planner, 2015) Every bond will have a maturity date and also the par value. Maturity date (due date) is the date that the loan will be paid off and the par value is the nominal value of a bond. The interest will pay at the fixed period, most of the company pays it semiannually. For many company, bonds may be used to raise the external funds to finance long-term investments and to fund the corporate activities, however, in the case of government bonds, it will help to finance current expenditure. (Certified Financial Planner, 2015) There are some types of issuer in Malaysia which is government, corporate and multilateral development banks (MDBs). The Bank Negara Malaysia (BNM) facilitates the central government to issue the bond and also issues its own bonds. Under corporate, there are financial institutions, non-financial institutions, corporations, and quasigovernment institutions. For example, the major issuers of the quasi-government bonds are Khazanah and Cagamas. (Team, 2012) For the foreign issuers, they can issue bond as well but they should open, maintain and manage their ringgit or foreign currency account with licensed onshore banks in Malaysia. Besides…

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