Settlement Payment Bond

Recognizing Bond

Posted on January 30, 2008 by Dev Group on Research & util

OBLIGASI



Introduction to Bonds

Bond is a term that is used in the financial world, which is a statement of the debt obligations to the holders of bonds with a promise to pay back debt principal and the coupon interest rates later when the due date of payment. Other provisions may also be included in the bond such as the identity of the holder of bonds, restrictions on the legal action undertaken by the publisher. Bonds are generally issued for a fixed period of time over 10 years. For example, the Bond on pemerintahAmerika called the "U.S. Treasury securities" issued for a maturity of 10 years or more. Letters debt timed 1 to 10 years called a "letter of debt and debt under 1 year is called" Letters Treasury. In Indonesia, the letter debt timed 1 to 10 years issued by the government called a letter of debt Negara (SUN) and the debt under 1 year government published a letter called the State Perbendaharan (Save).

Bonds is the sum of debt but is in the form of security. "Publisher" is a bond or sipeminjam debtor, while the "holder" is a bond lender or creditor and the "coupon" bonds is that interest on loans must be paid by the debtor to the creditor. With the publication of this bond is possible for publishers to obtain bond financing long-term investments with funds from sources outside the company.

In some countries, the term "bond" and "letter of obligation" is dependent on the time period fell temponya. The market generally uses the term for the bond issuance of loans in the amount of offered widely to the public and the term "letter of obligation" is used for publishing a letter in the small scale of debt that is usually offered to small investors sejmlah. There are no clear restrictions on the use of this term. There are also known as the term "letter of wealth" that is used for fixed income security with a maturity period of 3 years or less. Bonds have the highest risk compared with the "letter of debt" that has a medium risk and the "letter of wealth" that the lowest risk memiliko which views of the "duration" of the debt which has a short duration the lower the risk.

Both bonds and stocks is a financial instrument called security but the difference is that the owner of shares is a part of the owner of the company stock, while the holder of the bonds is only a lender or creditor to the publisher bonds. Bonds also usually have a jangja specified time period after which the time expires then the bonds can diuangkan while stocks can be owned forever (except the bonds issued by the UK government gilts which is called that does not have a period of maturity.



Benefits of Bond:

The first advantage is to provide fixed income (fixed income) a coupon. This is one of the main bonds, where the holder of the bonds will get interest income on a regular basis during the introduction of the bonds. Interest bonds generally offer higher interest than a given deposit or SBI. The second advantage is the advantage over the sale of bonds (capital gain).

In addition to earning a coupon, bond holders can also memperjualbelikan bonds held. Therefore, if you sell higher than the price when you buy it, then you as the holder of the bonds to obtain the difference is a capital gain.

Bond Risk:

1. Liquidity Risk

Risk is inherent in all bonds, government bonds and corporate bonds. This risk arises from the possibility of a bond likuidnya not be easy or not to sell a bond in the secondary market. Secondary bond market does not seramai secondary stock market. If the stock market just does not have liquid shares, especially in the bond market. For two bonds karektiristiknya the same except that a liquid and a liquid one does not, investors will ask for additional interest rate for bonds that are not liquid or liquidity risk premium, term bakunya. Bonds into a liquid in the secondary market if the demand for bonds is to buy enough, or indeed the parties have a role as a market maker that is one of its functions as a buyer and seller stand-by for the bonds.



2. Risk Maturitas

This risk also exists on the bonds all but especially in the corporate bonds and related to the maturity bonds. In general, the longer maturity of a bond, the greater the level of uncertainty so that the greater the risk maturitas. Maturitas risk of bonds (government and corporate). Developing countries such as Indonesia propriety greater risk than bonds maturitas developed countries such as the United States.

Therefore, a rational investor will ask maturitas premium for the same bonds but karekteristiknya fall temponya longer, say 10 years is more proportionate to 3 years. Who can ensure that the corporation ratingnya BBB still stand 10 more years? Countries can only scattered cases, such as Sovyet Union, Yugoslavia, and Czechoslovakia, especially the corporation. Because of the risk maturitas this period corporate bonds more than 5 years rarely published in Indonesia, the lack of demand.



3. Default Risk

The risk of default is only on the corporate bonds. Unlike the ORI, and SUN as the government guaranteed pengutang, corporate bonds is not guaranteed by the government. Investors who buy bonds should be aware that corporate investment may not return if the bond before maturity, the corporation is insolvent. The risk of corporate bonds and the wall so that the interest rates failed to be paid this is the risk of default.

Types of Bonds

* Bonds have fixed interest rate coupon with the amount of fixed interest rate paid on a regular basis throughout the period of validity bonds.

* Bond interest rate or float also called the Floating rate note (FRN) has calculated the amount of the coupon interest rates are based on a money market index such as LIBOR or Euribor.

* Junk bond or "high bond berimbal results" is a bond that has dibahah ratings investment ratings given by credit institutions pemeringkat. Because this type of bond has a high enough risk that the investors expect a lopsided result in a higher.

* Bonds without interest, or better known by the term (zero coupon bonds) are bonds that do not provide interest payments. This bond are giving discounts to the value of the ray. Bond holders receive the full principal debt at maturity bonds.

* Bond inflation or better known as (Inflation linked bond), where the principal value of debt on the bonds is based on the inflation index. Interest rates on bonds of this type is lower than the fixed interest rate bonds. However bertumbuhnya with the principal value of debt in line with inflation, then the satisfaction of payment obligations will increase as well. During the 1980s, the UK government is the first time issued bonds of this type is the name given Gilts. In the United States this type of bond known by the name "Treasury Inflation-Protected Securities (TIPS) and I-bonds.

* Other Bond Index, are based ekuiti debt (equity linked note) and the bonds to the index which is the business indicators such as income, value added or in the national index such as gross domestic product.

* Effect Beragun Asset bonds is that interest payments and principal debt secured by a reference form of cash flow derived from asset income. Examples of this type of bond is the effect beragun KPR (mortgage-backed security-MBS), collateralized mortgage obligation (CMOS) and collateralized debt obligation (CDOs).

* Subordination obligation bonds that have a lower priority ranking than other bonds issued by the publisher in the case of a liquidation. In the case of a kepailitanlikuidator, kemudaian tax payment of debt, and others. The bond is the preferred payment bond that has the earliest date of publication of the so-called senior bonds, after the bond is paid then the payment obligations satisfaction subordination arrangements. Because of the higher risk bonds this subordination typically have lower credit ratings than senior bonds. Example subordination of the bonds can be found in bonds issued by banks and the Securities Beragun assets. Publication of the next are generally made in the form of "tranches" [2]. Senior tranches are paid first tranches of subordination. there is a hierarchy of creditors. The first is payment of

* Immortal Bond, this Bond does not have a maturity period. This type of bond that is famous in the bond market is "UK Consols" published by the UK government, or also known as Treasury Annuities or Undated Treasuries. Some of these bonds was first published in 1888 and still are to this day. Some types of bonds also has maturity period of a very long one such as the West Shore Railroad Company issued bonds with a maturity period of the year 2361 (or 24 th century). Sometimes this is also seen lasting bonds based on the value of the cash bond at the time of this value is near zero rate.

* Bonds up performance is the name without the official certificate holders where anyone who can hold the bonds demanded payment for the bonds that are dipegangnya. Usually this bond is also given a series number and be registered in order to avoid counterfeiting, but can be traded like cash. Bond is very risky to the lost and kecurian. Bond is often disalah to menghidari imposition pajak.ref> Eason, Yla (June 6, 1983). "Surge in Final Bearer Bonds" New York Times. The [3] company in the United States stopped issuing bonds on the performance i9ni since 1982 and officially forbidden by the tax authorities in 1983.

* Bonds are registered bonds of ownership or peralihannya are registered and recorded by the publisher or by the effect of the administration. Interest payments and principal payments of debt akan dtransfer directly to the bond holder whose name recorded.

* Bonds in the United States or the region known as the (Municipal bond) are bonds issued by state, territorial, city, local government, or institutions. Interest paid to bond holders are often not subject to tax by the state of publishing, but the bonds that are issued to a particular purpose tax still apply.

* Bond or without a letter known as the Book-entry bond is a bond that does not have a certificate, where the high cost of making the certificate, and coupon bonds lead to the occurrence of this type. Bond uses an integrated electronic system that supports the settlement of transactions in pemindahbukuan effect on the capital market. [4]

* Bond lottery or also called Lottery bond is a bond issued by a country (usually European countries). Interest paid as setting interest payment on the bonds but the interest rate fixed bonds akan publisher who published redeem bonds at random at the time in which certain bond redemption or satisfaction the successful selection will be made with a higher price than the value listed on the bonds.

* War Bond war or bond is a bond issued by a country to finance the war

Types of bonds in Indonesia

In general, the type of bond can be seen from the publisher, namely, corporate bonds and government bonds. Government bonds are in some of its own type, namely:

1. Recap bonds, issued for a specific purpose, namely in the framework of Rekapitalisasi Banking Program;

2. Letters debt Negara (SUN), issued to finance the state budget deficit;

3. Indonesian Retail Bonds (ORI), together with the SUN, issued to finance the state budget deficit but with a nominal value so small that can be purchased in retail;

4. Securities or State Sharia can also called "Sharia bonds" or "Sukuk bonds", with the SUN, issued to finance the state budget deficit, but based on the principles of sharia.

Aspects of tax bonds were divided into 2 types, namely:

1. Bonds with a coupon (interest bearing bond)
* Taxes levied on the interest rate Pengasilan with 20% of the gross amount of interest in accordance with the ownership (holding period).
* Top diskontonya charged Income Tax of 20% of the price difference is at the time of the transaction or face value at maturity on the cost, not including interest running (accrued interest).
2. Bonds without interest (zero coupon bond)
* Only the top diskontonya charged Income Tax, ie 20% of the difference between the selling price at the time of the transaction or face value at maturity on the bonds in the bond cost.


Bond Rating Method

Bond Issuance

Publisher bonds are immense, almost every body of law can issue a bond, but a set of rules governing how this bond issuance is very strict. Classification of bond usually consists of:

* Institute supranasional, such as the European Investment Bank (European Investment Bank) or the Asian Development Bank (Asian Development Bank).
* Government of a country's government bonds issued in the country's currency and government bonds in foreign currency denominations with a common bond bond internasionalsovereign). (
* Sub-Sovereign, provincial, state or local authority. In the United States known as the Bond daerahIndonesia known as Letters of debt Negara (SUN) [1] (Municipal bond). In
* Institute government. Bond is also called agency bonds, or agencies.
* The Company issued bonds that the private sector.
* Special purpose vehicles is a company that was founded with a specific purpose for the particular asset that is intended to issue a bond which is disebt Asset Securities Beragun.

PHASE OBLIGASI BUY

To make investment bonds, there are several steps that need to be passed so that the purpose of investment in bonds to provide the maximum results and in accordance with the plan. Stage can be seen in the diagram in this paper.

Opening Account

The initial phase of the process must be done in the bond transaction is sekuriats select companies that have a fixed income division that handles the purchase and sale of bonds. Select a company with experience, a solid team both trader / dealer or research and a competitive fee.

By opening the account, you can find information and trade development of the bond at any time, so you get the bond market movements are accurate and up to date.

Understand Bond Products

At this stage, investors are encouraged to learn the specifics about the information required bond, either on their own investment, the potential risks and potential benefits. This can be obtained with learn independently, to ask the research company's securities, in which you open a bank account or through the internet.
Learn the instrument secra full bonds, investors are expected to recognize the good investment, so investment decisions easier. Learning the instrument, in which you want to put the investment, will provide maximum benefit in achieving the desired plan.

Perform Analysis

Analysis is done, so that decisions are taken in accordance with what is desired, the stability of income. Aspects that are required, such as coupons, time period, the value of publishing and ranking. Background belankang profile and also the consideration of its own. With complete information, it is expected that the decision taken does not cause a big loss. It is advisable to compare between similar bonds.

Buy mandate to provide

After analysis, you get the type of bonds to be purchased. The next stage is to give the mandate to purchase bonds trader or broker that we have chosen. The trader will make the purchase of bonds in accordance with the type and price you want. For example, buyers will purchase bonds ASII (Astra International) in 2002 with the 105 price or the price premium. Typically ray or nominal value amounted to Rp 100.

Prepare Fund

Obligasai need to buy funds that are not small. Purchase of bonds is usually worth Rp 1 billion, making it difficult for individual investors to participate in bond investing. However, there is also offering a valuable Rp 50 million or Rp 100 million.
After the purchase of the proposed mandate, should the funds already allocated. Do not until you apply penalty, because the delay in payment. In addition, the placement of funds in cash that may be completely unexpected with the smooth flow of financial cash flow and your family.

Settlement Payment Bond

Payment of funds is done through the purchase of bonds to transfer securities to the account of the company. After payment is complete, then you wait as buyers stay on the settlement process the transaction. Bonds that you have purchased will be listed in the company's securities in the account recorded in KSEI (Kustodian Sentral Efek Indonesia).
Pemindahtanganan rights obliasi akan very easy to do electronically, at this time because the physical bond is no longer the form of certificates, but have scriptless (the letter).
Administrative and bookkeeping will be done by bank securities custodian company. For this, of course the bank will be allowed to charge certain.

Hopefully, this brief review the information you who are interested in investing long-term debt instruments such as bonds. Happy investing.

from :http://www.infovesta.com/roller/vesta/entry/mengenali_obligasi1

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