Tuesday, January 8, 2013

Exchange Trade Bond and Sukuk (ETBS) – part 2


Last year, we were informed that Bursa Malaysia plan to launch it first ETBS in Malaysia and I write something about it. (click here) However, the plan was delayed until 2013. Last few days, only noticed they plan to launch ETBS on 8 Jan 2013. The proposed Exchange Trade Sukuk will be issued by Dana Infra (guarantee by Government of Malaysia) with profit rate of at least 3.70%, payable half yearly with 10 years of expiry date.

ETBS is a bond / Sukuk issued by Government of Malaysia or corporates to raise fund for their need. Sukuk is bond issued compliance with Shari'ah principles.

With ETBS, investors can now have a broader choice of product which yield stable returns with capital protection if held to maturity. Investor can expect steady flow of income knows as coupons / profit.
This is an asset class to hedge when markets are bearish, and means to develop stable income for many years.

Now the question is, should you invest this ipo, the first retail bonds in Malaysia through IPO? Some would say yes, if you look at the point, the bond is guarantee by Government of Malaysia. Also, if you have no idea where to park excess funds, no harm to enter this low risk product, balance your portfolio with 3.70% stable income every year.

For me, I will only try small portion of fund in this ETBS as I can still find other investment option which provide better return of more than 3.70% per year. Let the market force to decide the pricing for this bond, if anything unexpected happen and cause the yield return to be about 5% or more, then it's an opportunity!
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p/s: As expected, the listing of ETBS on 8 Feb 2013 not really exciting, the price quote was RM101.30 compare to IPO price of RM100.00. (stock code: 0400GA)
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