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Prof. Dr. Mohd. Maƞsum Billah

E-mail: masum2001@yahoo.com
 monventional Bond Market
O Primary market
A financial market in which new issues of a security, such as a bond
or a stock, are sold to initial buyers by the corporation or
government agency borrowing the funds.The investment bank
underwrites securities and then sells them to the public.
O Secondary Market
A financial market in which securities that have been previously
issued can be resold. It could be an organised market, such as
KLSE, or over-
over-the counter (OTm market in which dealers at
different locations stand ready to buy or sell securities over the
counter to whoever accept their price.
 Market Participants

O Dealers
Dealers link buyers and sellers by buying and selling securities
O Brokers
Agents of investors who match buyers with sellers of securities
O Investors
Includes individual investors, financial institutions, pension funds,
mutual funds and governments, from around the world.
 Types of Bonds

O monvertible Bonds
O Extendible/Retractable Bonds
O Foreign murrency Bonds
O Government Bonds
O High Yield or "Junk" Bonds
O Inflation--Linked Bonds
Inflation
O Zero moupon or "Strip" Bonds
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O Present Value
O Yield
Yield--to
to--Maturity
O Duration
O Interest Rates
 Islamic Bond Market

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O Securitization
O Bond Issuance
O Trading of dept certificates
Process of Securitization using Baiƞ al-
al-Inah

(1 Sells an asset to the creditor in cash @RM14mil

(2 mash payment RM14mil

mreditor Debtor
(3 For future date, the debtor buys back the
asset for 15 mil
 Issuance of Islamic Dept mertificate
(Shahadah al-
al-Dayn

Two types of bonds:

O Islamic coupon bond

O Islamic zero coupon bond
 Trading of Dept mertificate ƛ
Discounted Baiƞ al-
al-Dayn

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 Islamic Bond Market

Muqarada Bonds an Alternative for Islamic Dept Bonds

 Securitization of Musharakah

O Musharakah is a mode of financing which can be

securitized easily.

O Especially in case of big projects where huge

amounts are required
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O Every subscriber can be given a Musharakah certificate,

which represents his proportionate ownership in the
assets of the Musharakah.
O After the project is started, these Musharakah
certificates can be treated as negotiable instruments.
O man be bought and sold in the secondary market.
 Difference Between Musharakah Certificates and a
Conventional Bond
Musharakah Certificates
O Represents the direct
ownership of the holder in
the assets of the project.
O If all the assets of the joint
project are in liquid form,
the certificate will represent
a certain proportion of
money owned by the
project.
Conventional Bond
O Has nothing to do with the
actual business undertaken
with the borrowed money.
O The bond stands for a loan
repayable to the holder in
any case, and mostly with
interest.
Growth in MYR Islamic Bond Market


 

 
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