BONDS

Bonds is a term used in the financial world is a statement of the debt from the bond issuer to the bondholders and its promise to repay the capital and interest coupons will be at the due date of payment. Other provisions may also be included in the bonds such as the identity of the bondholders, the limitations on legal action taken by the publisher. Bonds are generally issued for a fixed term of over 10 years. For example, in U.S. government bonds, called "U.S. Treasury securities" issued for a maturity period of 10 years or more. First term of the debt up to 10 years old called "fixed income" and debt under one year is called "Treasury Bills. In Indonesia, the first term of the debt up to 10 years issued by the government called the Government Securities (SUN) and the debt under 1 year issued by the government called the State Perbendaharan Letter (NES).

In short bonds is the debt but in the form of security. "Publisher" is an sipeminjam bonds or the borrower, while the "holder" of the bonds is a lender or lenders, and "coupon" bonds is the interest on the loan to be paid by the debtor to the creditor. With this bond issuance will be possible for the issuer in order to obtain long-term investment financing with funds from sources outside the company.

In some countries, the term "bond" and "debt securities" is used depends on the maturity period. Market players typically use the term bonds for the issuance of debt securities in large quantities offered widely to the public and the term "debt" is used for the issuance of debt securities in small-scale sejmlah usually offered to small investors. There are no clear restrictions on the use of this term. There is also a well known term "treasury note" which is used for fixed-income securities with a maturity period of three years or less. Bonds have the highest risk compared with the "debt" which has medium-risk and "treasury note" that the lowest risk memiliko where visits from the "duration" bonds which have a shorter duration and lower risk.

Bonds and stocks are both a financial instrument called security but the difference is that the owner of the shares is part of the owner of the issuer company stocks, while bond holders are just a lender or lenders to the issuer of the bonds. Bonds also usually have a set time jangja which arrived after that time period while the bonds redeemable shares can be owned forever (except in bonds issued by the British government called gilts that have no maturity.

Bond issuer
The issuer is very vast, almost every legal entity able to issue bonds, but the rules on procedures governing the issuance of these bonds are very strict. Classification of the bond issuer typically consist of:


Supranational institutions, such as the European Investment Bank (European Investment Bank) or the Asian Development Bank (Asian Development Bank).
The government of a country issuing government bonds denominated in their country and government bonds denominated in foreign currencies are commonly referred to as international bonds (sovereign bonds).

Sub-sovereign, provincial, state or local authority. In the United States known as regional bonds (municipal bond). In Indonesia, known as Government Securities (SUN)

Government Institutions. Bonds are usually called agency bonds, or agencies.

Companies that issue corporate bonds.

Special purpose vehicles are a company founded with a specific purpose in order to control certain assets that are needed to issue a common bond disebt Asset Backed Securities.


Issuing bonds
The process commonly known in the issuance of a bond is through underwriters or also known by the term "underwriting". In underwriting, one or more securities firms will form a syndicate to buy all the bonds issued by the issuer and resell it to investors. On the sale of government bonds is usually through an auction process.

Features of bonds
The most important features of a bond are:

The par value or principal value of debt, namely the value of the interest to be paid by the issuer and must be settled at the end of the maturity date.

The price of the publication, which is a price that is offered to investors at the time of initial sale of the bonds. The net value received by the publisher is after deducting costs of issuance.

Maturity date, which is a date set at which time the issuer is obliged to repay the nominal value. Throughout the repayment / payment has been done to the publisher no longer has an obligation to the bondholders after the date of maturity of the bonds. Some bonds have been issued with a maturity period of more than one hundred years hinga. In early 2005, the market in euros for bonds with a maturity of 50 years began to flourish. In the market for U.S. three groups of bond maturities, namely:

o Short term (bonds or bills): the time to maturity up to one year;
o Medium Term Note: time to maturity between 1 and 10 years;
o Long term (bonds): maturities over 10 years.

Coupons, interest rates paid by the issuer to the bondholders. Usually this interest rate is fixed throughout Naturalife Greenworld scale life of the bond, but can also refer to a money market index such as LIBOR, and others. The term "coupon" because it originates from the past, physical bonds were issued with interest coupons attached to bonds. On coupon dates the bond holder would give the coupon to the bank in exchange for the payment of interest.

Coupon date, the interest payment date of the issuer to the bondholders. In America, most of coupon payments on the bonds is a "half year", which means that the coupon payments due every six months. In Europe, most bonds are an "annual" or one coupon per year.

an official document, a document that describes in detail the rights of shareholders. In America, this provision is governed by the financial departments of government and commercial laws which this document before the courts as a contract. Provisions in the official documents which are difficult to change once changed can only be done with the approval of a majority of bondholders.

The options: a bond may contain provisions regarding the option rights to buyers of bonds or bond issuer.

Right of redemption, some bond entitles the issuer to redeem the bonds before the maturity date of the bonds. This type of bond known as a bond purchase options. Most of these types of bonds entitles the issuer to redeem the bonds at par value. In some of the bonds require the issuer to pay a premium, called the option premium. This is primarily used for high-interest bonds. In these types of bonds there are many strict requirements that restrict the operations of the issuer, in order to liberate the publisher of the restrictions was undertaken early settlement of the bonds. but with higher costs.

The right to sell, some bond entitles the holder to force the issuer to redeem the bonds before the maturity date; see put option.

The exercise date is the date of purchase options dimaka or selling options can be exercised before the maturity date of the bonds, which generally there are four ways that this exercise is:

Style Bermuda has a few dates, usually coinciding with coupon dates.

European style has only one exercise date, this is a special case of Bermuda style.

American style option can be exercised any time until their maturity dates.

Sales because death is an option given to the heirs of the holder of an option to sell back their bonds to the issuer in case of death of the holder of bonds or suffer permanent disabilities.

Funds are also dinenal warranty or terms of a sinking fund is provided in the "official documents" which requires the existence of a certain portion of bonds that can be withdrawn periodically. Publishers can also pay to the trustee yaitud ith random way to purchase the bonds issued or other options by buying bonds on the market and give it to the trustee.

Convertible bonds are bonds which allow bondholders to redeem bonds held with a number of shares of the issuer company.

Bonds exchangeable or also known as Exchangeable bond ("XB") that allow bondholders to redeem bonds held by the shares of the company other than stock of the issuer, usually with a stock subsidiary of the issuer.


The types of bonds

Fixed rate bonds have a coupon with a fixed amount that is paid regularly during the life of the bond.

Floating rate bonds or usually called the Floating rate note (FRN) has calculated the amount of coupon interest refers to a money market index such as LIBOR or Euribor.

Junk bond or "high-yielding bonds" are bonds that are rated investment grade dibahah given by credit rating agencies. Therefore this type of bond has a high enough risk so investors expect a higher yield.

Bonds without interest, or more commonly known by the term (zero coupon bond) are bonds that do not provide interest payments. These bonds are traded by granting discounts from par value. The bondholder receives the full principal payable at maturity of the bonds.

Bonds inflation or better known as the (inflation-linked bond), in which the principal amount of debt on these bonds are indexed on inflation. Interest rates on bonds of this type is lower than fixed rate bonds. However, with the principal amount grows in line with inflation, the payments will also rise. In the period of the 1980s, the British government was the first time issued bonds of this type, called Gilts. In America this type of bond known as Treasury Inflation-Protected Securities (TIPS) and I-bonds.

Other indexed bonds, are debt-based equity (equity linked notes) and bonds indexed on a business indicator such as income, added value or on a national index such as gross domestic product.

Asset-backed securities are bonds whose interest and principal payments owed by underlying cash flows from other assets. Examples of these types of bonds are mortgage-backed securities (mortgage-backed security-MBS), collateralized mortgage obligation (CMOS) and collateralized debt obligation (CDOs).

Subordinated bonds are those that have a lower priority than other bonds issued by the issuer in case of liquidation. In the event of bankruptcy, there is a hierarchy of creditors. First is to payment from the liquidator, kemudaian payment of tax debts, and others. The bondholders preferred that the payment is a bond that has the earliest date of issuance of so-called senior bonds, these bonds are repaid after the repayment of subordinated bonds before payments are made. Therefore, higher risk, subordinated bonds usually have lower credit rating than senior bonds. The main examples of subordinated bonds can be found in bonds issued by banks and asset-backed securities. The latter are often carried out in tranches "[2]. The senior tranches get paid first from the subordinated tranches.

Perpetual bonds, bonds do not have a maturity period. Bonds of this type are known in the bond market is "UK Consols" issued by the British government, or also known as Treasury Annuities or Undated Treasuries. Some of these bonds was first published in 1888 and still trade today. Some bonds of this type also has a maturity period of a very long time such as the West Shore Railroad Company issued bonds with a maturity date in the year 2361 (or 24th century). Sometimes these visits are also lasting bonds based on the cash value of the bonds on the current value of principal near zero.

Bearer bond is an official certificate without the name of the holder where anyone who holds these bonds may demand payment of the bonds that held them. Often they are registered by a number to prevent counterfeiting, but can be traded like cash. The bonds are very risky against loss and theft. These bonds are often misused to conceal pajak.ref> Eason, Yla (June 6, 1983). "Final Surge in bearer Bonds'" New York Times. The company in America to stop the issuance of bearer bonds i9ni since 1982 and is officially banned by the tax authorities in 1983.

Registered bond is a bond whose ownership or a transfer is registered and recorded by the issuer or by a registrar. Payments of interest and principal payments will dtransfer debt directly to the bondholders whose names were listed.

Bonds or in the American region known as the (municipal bonds) are bonds issued by states, territories, cities, local governments, or their agencies. Interest paid to bond holders is often exempt from taxation by the state that issued, although municipal bonds issued for certain purposes may be tax exempt.

Bonds scripless or better 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 resulted in the emergence of this type. Bond uses an integrated electronic system that supports the book-entry settlement of securities transactions in the capital market.

Bonds are also called Lottery, lottery or bond is a bond issued by a country (usually European countries). The flowers are paid as interest payments on the procedure of the fixed rate bonds but bond issuer will redeem the bonds are randomly such time as the redemption or repayment of bonds of the lucky ones selected will be conducted at a price higher than the value indicated on the bonds.
war or War Bonds bond is a bond issued by a country to finance the war

Bonds issued by foreign institutions
Some companies, banks, government and other regulatory agencies can issue bonds denominated in other foreign currency which seems to be more stable than its domestic currency. Issuance of bonds denominated in foreign currencies is also providing the possibility for the bond issuer has entered the bond trading market outside the country. The issuance of these bonds are also often used as a means of hedging against the risk of volatility changes in exchange rates. Some of these bonds are dubbed with the nickname of a typical as shown below:


or the Eurodollar bond Eurodollar bonds, bonds denominated in U.S. $ issued by the bond issuer from a country outside the United States.
Bonds or Kangaroo Kangaroo bonds, are bonds denominated in Australian dollars (AUD) issued by the bond issuer from a country outside Australia and traded on the Australian market.

Maple or Maple Bonds bonds, are bonds denominated in Canadian dollar bonds issued by the issuer from a country outside of Canada and traded on the Canadian market.

Bonds or Samurai Samurai bonds, are bonds denominated in yen bonds issued by the issuer from a country outside Japan and traded on the Japanese market.

Bonds Yankee or Yankee bonds, are bonds denominated in USD issued by the bond issuer from a country outside the United States and traded on the American market.

Bonds Shogun or Shogun bonds, are bonds denominated in dollars issued in Japanese yen by the bond issuer from a country outside of Japan.

Bulldog bonds, are bonds denominated in sterling issued in London by an institution or a foreign government.
Loan Ninja or Ninja loan, a syndicated loan denominated in yen by foreign creditors.

Formosa or Formosa bond bonds, are bonds denominated in the Taiwanese dollar bonds issued by the issuer from a country outside of Taiwan and traded on the Taiwan market.

Bonds Panda or Panda bonds, are bonds denominated in renminbi (RMB) issued by the bond issuer from a country outside the PRC and traded on the Chinese market.


Bonds in Indonesia
In general the types of bonds can be seen from the publishers, namely, corporate bonds and government bonds. Itself consists of government bonds in some species, namely:

Recap bonds, issued for a specific purpose that is within the framework of Bank Recapitalization Program.
Government Securities (SUN), issued to finance the budget deficit;

Indonesian Retail Bonds (ORI), together with the Suns, issued to finance the budget deficit but with a smaller nominal value that can be purchased in retail;

State Islamic Securities or may also be called "Islamic bonds" or "sukuk bonds", together with the Suns, issued to finance the budget deficit but based on Islamic principles.

Bond Market
As an effect, the bonds can be traded.
There are two types of bond markets, namely:

Primary Market is the place when diperdagangkannya bonds began to be published. One of the requirements of the Capital Market regulations, the bonds must be listed on stock exchanges to be offered to the public, in this case typically is at the Surabaya Stock Exchange (SSE) is now the Indonesian Stock Exchange (BEI).


Secondary Market is where it is published and bonds diperdagangkannya tercarat in SSX, bond trading will be done in secondary market. At this time, trading would be done in Over the Counter (OTC). This means that there is no physical trading places. Bondholders and those who want to buy it will interact with the aid of electronic devices such as email, online trading, or phone.


Bond Tax Aspects And Types of bonds and the charge
From the aspect of taxation of the bonds are divided into two kinds, namely:

Bonds with a coupon (interest bearing bond)

Tax imposed upon the interest rate to 20% of the gross amount of interest in accordance with the period of ownership (holding period).

Top diskonto subject to Income Tax amounting to 20% of the excess sales price when the transaction or the par value at maturity over the acquisition price, excluding accrued interest (accrued interest).

Bonds without interest (zero coupon bond)

Only the top diskontonya are subject to income tax, amounting to 15% of the difference in price when the transaction or the par value at maturity of the bonds above the acquisition price.

Final Income Tax Withholding Procedures for bonds
Withholding of final tax on income received from bonds that are traded or reported to the bourse, made by:

Bond issuer (the issuer) or a custodian designated as the payment agent:

1. of interest, received by holders of interest bearing bond,
at maturity interest; and

2. the discount, which was well received by the holder or holders of
interest bearing bond zero coupon bond, at maturity of the bonds.

Company Securities (broker) or the bank as a broker:

interest rate and discount to holders of interest bearing bond and the discount to holders of zero coupon bond, the bond seller received when the transaction.

Company securities (broker), banks, pension funds and mutual funds, as the purchaser of the bonds directly without going through a broker for interest and discount of zero interest bearing bond and bond coupond received or accrued by the seller of the bonds at the time of the transaction.