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A bond is a long-term loan where the borrower pays the bond holder interest over a period of time and repays the full loan amount on a predetermined maturity date. Spot deals are transacted on the standard t+3 settlement date while forward deals have a settlement date after t+3.
Benefits
- Liquid spot market
- Dependable income provides the investor with a regular and steady income while preserving the initial investment amount (principal)
- Security bond holders usually have priority over stockholders when a company is liquidated and more likely to receive payment
- Portfolio risk diversification
- Safe investment - bonds are evaluated and rated based on credit history and ability to pay interest/repay obligations on time
- Settlement is electronic with t+3 settlement and less of spot trades is achieved
Who should use this product?
- Investors looking for a long-term stable investment
- Investors looking to enhance the long-term performance of a portfolio of assets
- Investors looking to diversify risk in their portfolio
How to use this product?
- If trading through the Central Order Book, trades are margined and guaranteed by SAFCOM, eliminating counterparty credit risk
- If trading bonds as Report Only trades counterparties pick up the risk and credit lines of each other
- Various types of bonds available - Fixed Rate Notes (Vanilla Bonds), Floating (Variable) Rate Notes, Zero Coupon Bonds and Commercial Paper.
- As portfolio risk diversification
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Learn more about Spot and Forward Bonds |
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