SINGAPORE: iFAST Capital Sdn Bhd, the wholly-owned Malaysia subsidiary of SGX-ST Main board-listed iFAST Corporation Ltd., is selling investment grade bonds to retail investors. This move is in conjunction with the Securities Commission’s (SC) initiative to liberalise the regulatory framework to facilitate greater access into the RM 1.3 trillion Malaysian bond and sukuk market.
Investors will be able to transact retail-qualified bonds and sukuk from as low as RM 1,000 in nominal value through iFAST Capital Malaysia’s online portal FSMOne, and through the FA companies and financial institutions which use iFAST’s Business-to-Business (B2B) platform services.
The new regulatory framework allows bond issues that have met the seasoning criteria to be offered to non-sophisticated retail investors through a product highlight sheet without the need for issuers to make disclosures via a full-fledged prospectus. Under this framework, corporate bonds and sukuk that are eligible must have been in the market for at least 12 months, and have a minimum credit rating of A, among other requirements.
The range of corporate bonds and sukuk that can be offered to retail investors have also expanded to include more than just plain-vanilla products.
“For example, a retail investor can now invest in a 5-year Affin Bank bond that has a yield of 5.15% per annum. This is a better alternative than putting your money in a fixed deposit with Affin Bank that yields only 4.05% per annum,” said Dennis Tan, Managing Director of iFAST Capital Malaysia.
Since 2017, iFAST Capital Malaysia has been providing sophisticated investors an outlet outside of traditional banks to transact in government and corporate bonds starting from RM 10,000 through its Bond Express service at the FSMOne website. Only sophisticated investors who have at least RM 3.0 million in assets or an annual income of more than RM 300,000 could participate.
“The high barrier of entry and the lack of accessibility to critical information pertaining to bonds has meant that bonds have not been a fixture in many investors’ portfolios. The traditional bond market has long been dominated by sophisticated investors who can have access to bonds at RM 250,000 per odd lot. But even then, there is limited availability or choices, because standard lots for corporate bonds and government bonds are traded at RM 5.0 million and RM 10 million respectively. With the new seasoning framework and what we are offering on our platforms, investors can now invest in investment grade bonds from as low as RM 1,000,” Tan said.
“We expect that 20% of the RM 470 billion fixed deposit market in Malaysia will shift into retail bonds,” Tan commented.
The initiative is further complemented by BIX Malaysia, a platform established by the SC to provide information on bonds and sukuk issued in Malaysia. [the_ad id=”31605″]