Fixed Income Trading
Making your fixed income trading better and easier than ever with Kasikorn Securities Fixed Income Trading Service
What are Fixed Income Instruments?
Fixed Income Instruments are contractual obligations between the issuer (or borrower) and the fixed income instrument holder (or lender) with a finite amount of time and fixed interest return. The instrument can be traded and exchanged. The most common fixed income instrument is the government bond, issued and sold by the government and government agencies; and corporate bonds issued by corporate entities.
Fixed Income Instrument can be categorized by the issuer
- Government Issuers
- Treasury bond is a fixed income instrument issued by the government or government agencies with a maturity greater than 1 year. Examples of treasury bonds are bonds issued by the Thai government, Bank of Thailand, and State-owned Enterprises which might be guaranteed by the Ministry of Finance.
- Treasury bill is a fixed incomed instrument issued by the Ministry of Finance.
- Corporate Issuers
- Corporate bond is a fixed income instrument issued by a corporate entity with a maturity greater than 1 year. Corporate bonds generally pay coupons every 6 months.
- Bill of Exchange (BE) is a short-term fixed income instrument offered to investors through private placement on a discounted basis.
Fixed income instruments categorized by claim features.
- Subordinated Bonds
- In the case of default where the issuer will need to liquidate the assets and repay the debtors, the subordinate bond holders will have the right to claims after the payments have been made to the senior –secured bond holders and secured bond holders.
- Fixed-rate Bonds
- Fixed-rate bonds pay a fixed return on a fixed schedule. Most of the bonds are generally fixed-rate bonds.
- Floating Rate Bond
- Floating rate bonds are instruments which returns are tied to an index or market reference rate such as savings interest rate or inflation.
- Convertible Bond
- Convertible Bonds are bonds with an additional option that allows the bondholder to convert the bond to a pre-agreed number of shares during a pre-agreed window at a pre-agreed price.
- Callable Bond
- A Callable Bond is a bond where the issuer has the right to redeem or pay off prior to the bonds' maturity date at the terms and conditions in the contract. Investors should be aware of the key features of the bond before investing. Generally, the issuer will call the bond when the new interest rate or new cost of funding to the company is lower than the cost of funding on the callable bond which may be due to lower interest rates or a the company obtaining a better credit rating.
- Perpetual Bond
- A perpetual bond is a bond without a maturity date. The issuer will be paying interest on the bond for an infinite amount of time subjected to the terms and conditions in the contract.
For inquiries on Fixed Income Instrument Trading, please contact your financial advisor or