Capital Market Instrument Financing

Typically, corporations issues such financial instruments to the investment market to raise the desired financing amount to finance corporate activities and corporate growth as well to pare down existing financing such that the overall gearing position of the corporation can be improved.

Straight debt issuance in the local context comprise short term commercial papers, medium term notes and longer term bonds or in today’s more fashionable description, Sukuks. Hybrid debt instruments comprise convertible and exchangeable debt securities. Holders of convertible debt securities are entitled to change the debt paper into shares in the issuing corporation.

Holders of exchangeable debt securities entitle the holders to change the debt papers into shares in companies held by the issuing corporation. Asset backed securities refer to financial instruments that entitle holders to an interest in an underlying pool of assets that had been passed on to a special purpose vehicle created through a corporate scheme.