BIX GLOSSARY

BIX GLOSSARY

Get familiar with the common terms used in bonds and sukuk.

A
Accrued Interest
The interest on a bond that has accumulated since the principal investment or the previous interest payment
Accrued profit
The profit on a sukuk that has accumulated since the principal investment or the previous profit payment
Asset-backed bonds or securities (ABS)
A bond or sukuk issued pursuant to a securitisation transaction
B
Basis point
A measure used in quoting yields of bonds and sukuk. One basis point is 0.01% of yield or a hundredth of one percent
Benchmark
A bond or sukuk whose terms are used as comparison with other bonds or sukuk of similar maturity
Bonds
Bonds are issued by the government or a corporation in exchange for monies from investors. In return, the investor will receive periodic coupon payments throughout the tenure of the bond
C
Call
A call occurs when an issuer decides to pay the principal amount prior to the identified maturity date.
Clean price
The price of a bond or sukuk that excludes any interest accrued since issuance or the most recent coupon/profit payment
Corporate bond
A bond issued by a corporation in order to raise funding
Corporate sukuk
A sukuk issued by a corporation in order to raise funding
Coupon
A coupon is a periodic interest payment paid out by the issuer to investors throughout the tenuer of the bond
Credit Rating
The measure of the ability of a bond or sukuk issuer to carry out its stated financial obligations
D
Day count
The convention used to calculate the number of days in a coupon or profit payment payment period
Default
Occurs when the issuer fails to meet payment obligations when due
Dirty price
The price of a bond or sukuk that includes any interest accrued since issuance or the most recent coupon/profit payment
G
Government bond
A bond issued by a government in order to raise funding
Government sukuk
Sukuk issued by a government in order to raise funding
I
Issuer
An entity, either Government or corporate that raises funds through the issuance of bonds or sukuk
M
Maturity
The date when the bond or sukuk issuer fully repays the principal amount to investors
N
Nominal value
Also known as face value or par value, is the stated value of an issued bond or sukuk
O
Offering documents
In the Malaysian context these documents refer to the Principal Terms and Conditions, Information Memorandum and Trust Deed. These documents apply to offerings to sophisticated investors only
Over-the-counter market (OTC)
The trading of bonds and sukuk that occurs outside an exchange
P
Primary market
Market for new issues of bonds and sukuk
Principal
The face amount of a bond or sukuk
R
Redemption
The paying off or buying back of a bond or sukuk by the issuer either prior to or at maturity
Residual tenure
Number of years until a bond or sukuk matures
S
Secondary Market
The market for the trading of bonds and sukuk
Settlement date
The date on which the trade of a bond or sukuk is completed via the transfer of funds
Sukuk
Certificates of equal value which evidence undivided ownership or investment in the assets using Shariah principles and concepts endorsed by the Shariah Advisory Council
Sukuk bai’ bithaman ajil
Certificates of equal value evidencing the certificate holder’s undivided ownership of the asset, including the rights to the receivables arising from the underlying contract
Sukuk ijarah
Certificates of equal value evidencing the certificate holder’s undivided ownership of the leased asset and/or usufruct and/or services and rights to the rental receivables from the said leased asset and/or usufruct and/or services
Sukuk ijarah
Certificates of equal value evidencing the certificate holder’s undivided ownership of the leased asset and/or usufruct and/or services and rights to the rental receivables from the said leased asset and/or usufruct and/or services
Sukuk istisna`
Certificates of equal value evidencing the certificate holder’s undivided ownership of the asset, including the rights to the receivables arising from the underlying contract
Sukuk mudharabah
Certificates of equal value evidencing the certificate holder’s undivided ownership in the mudharabah venture
Sukuk murabahah
Certificates of equal value evidencing the certificate holder’s undivided ownership of the asset, including the rights to the receivables arising from the underlying contract
Sukuk musharakah
Certificates of equal value evidencing the certificate holder’s undivided ownership in the musharakah venture
Sukuk wakalah bi al-istithmar
Certificates of equal value evidencing the certificate holder’s undivided ownership in the investment assets pursuant to their investment through the investment agent
T
Tranche
Is one of several bond or sukuk offered as part of the same facility
Y
Yield to Maturity
The total return anticipated on a bond or sukuk if held until the end of its lifetime
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