What
are the different types of bonds?
Bonds are classified according to their maturity terms as short-term,
medium-term or long-term. What constitutes as short-term, medium-term
or long-term debt securities, however, varies in definitions.
Some describe short-term debt securities as those having maturities
of one, three or six months, usually less than a year. Medium-term
bonds as having maturities of between one and seven years, while
long-term bonds, usually government bonds, as having maturities
up to 30 years. There are other definitions that classify short-term
bonds as those with maturity of one to five years, medium-term
bonds as between five and 12, and long-term bonds as those above
12 years.
Bonds
are also classified according to the type of issuer, for example,
those issued by governments are called government bonds, those
by the private sector corporations as corporate bonds or PDS.
There are also quasi-government bonds, Cagamas bonds and Islamic
private debt securities or Islamic bonds.
Government
Bonds
Examples
of government bonds being traded are Government
Investment Issues (GII) and Malaysian
Government Securities (MGS). There are also short-term money
market instruments issued by the government such as the Bank
Negara Malaysia Bills (BNB) and Malaysian Treasury Bills (MTB).
Bank
Negara Malaysia launched the savings bonds for senior citizens
(above 55 years old) on 19 December 2001. The RM1 billion
Bon Simpanan Malaysia Siri 03 (BSM 03) was placed on sale
from 2-31 January 2002. Senior citizens who bought these bonds
would be paid an annual interest of 5%. The bond matures in
two years' time.
Corporate
Bonds
Here are examples of the types of corporate bonds issued in
the Malaysian capital market:
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