Getting Started on Bond Investments and Credit Risk Analysis
Course Dates: 25 & 26 September, 2 & 3 October 2019 (4 evenings)
Course Fee: $425* / *Early Bird Price valid until 18 September 2019 (Usual Price: $455)
Knowing how to invest well is a very essential part of everyone’s life.
If we are able to invest well, it will provide us with a sustainable, long-term passive income and hence, free time to pursue our other more important goals and interests in life. Very often, we hesitate to invest due to a lack of knowledge on how to and what to invest in. It is thus important to acquire knowledge in investing so as to invest well and have a peace of mind.
In any investing, such as in bonds, stocks or fixed deposits, we are faced with 2 main categories of risks:
- a) Product Risk and b) Counterparty Risk (i.e. Credit Risk)
We need to understand both risks well, particularly Credit Risk, so as to be profitable in our investments. This course is specially structured to cover both aspects of investing (i.e. Credit Risk and Product Risk) on Bond Investments.
What is a bond? – When we buy or invest in a corporate bond, we are lending money to the corporate who issued the bond. While bonds, like fixed deposits, involve lending money to a 3rd party entity, bonds and fixed deposits are in fact two different investment products with different risk profiles. Likewise, bonds also have a different risk/reward profile as compared to stocks, hence, it offers a good alternative to investors who are seeking a more diversified investment portfolio.
This course is for retail investors who are new or have some basic understanding about bond investments, and need a more in-depth understanding on the fundamentals of bond investment (including credit risk analysis of the bond issuer). It offers a structured and focused way to gain practical knowledge on bond investments. Topics will be discussed in greater details using many retail bonds currently trading on SGX.
The ultimate aim is to enable course participants to build up their confidence so that they can get started and make their own informed decision on their bond investments. Participants can apply the knowledge gained from this course immediately to their bond investments.
Key bond investment concepts will be learned through lectures using real-life case studies, interactive discussion and Q&A in class. Class size will be capped at 25 participants to ensure a conducive environment for learning and asking questions.
Section 1 – Credit Risk Analysis 101
1.1) Why do some businesses fail?
1.2) Business model
1.3) Balance Sheet analysis
1.4) Capital Structure analysis
1.5) Cashflow risk analysis
1.6) Liquidity risk analysis
1.7) Debt servicing capability
1.8) What are the early warning signals of business failure?
1.9) Use SGX StockFacts as a preliminary credit risk screening tool
Section 2 – Getting Started on Bond Investments
2.1) Understanding key risks and features of:
- Plain vanilla fixed rate bond
- Callable bonds
- Zero-coupon bonds
- Perpetual capital securities
- Asset-backed securities
- Singapore savings bonds
- Singapore government securities T-bills
- Singapore government securities bonds
2.2) Things to look out for before investing in a bond – what are they?
2.3) Bond Prospectus / Product Highlights Sheet – what should you focus on?
2.4) Bond prices in the secondary market? – what drives them?
2.5) Risks in investing in bonds – What are they and how do you manage them?
2.6) Bond credit ratings – What it is and its implications on your bond investments?
2.7) Accrued interests on Bonds calculations
2.8) Dirty price vs clean price
– Cum-Interest price vs Ex-Interest Price
- What are they?
- How do they affect your returns?
2.9) How to set your target price for the bond? – What is credit yield spread? What is the appropriate discount rate to price a bond?
2.10) Calculating investment returns on your bond investment (Current Yield vs Yield to Maturity)
2.11) Learn to use an internet calculator to calculate indicative bond price and yield to maturity of a plain vanilla fixed rate bond, callable bond and zero-coupon bond
2.12) Quantification of interest rate risk in a plain vanilla bond investment
2.13) Information resources – where and how to find them?
Case Study 1) Review a real case of a company facing financial difficulties, what are the early warning signals to identify possible default risk?
Case Study 2) Review the key terms and conditions of the IPO prospectus of a retail bond currently trading on SGX. What to focus on?
Case Study 3 & 4) Callable bonds
Case Study 5) Singapore Savings Bonds (SSB)
Case Study 6) When considering two plain vanilla fixed rate bonds to invest, how to decide which bond is more suitable for you? What are the key factors to focus on?
Case Study 7) Given a company that issues both plain vanilla fixed rate bonds and shares, how to decide which is more suitable for you? What are the key factors to focus on?
Case Study 8 & 9) Perpetual Capital Securities and Asset-backed Securities
Case Study 10) What to look out for when constructing a simple bond portfolio and reviewing the Yield to Maturity of all the retail bonds currently trading on SGX and their sensitivity to interest rate movement
Yew Jyu Lan, CFA is a Chartered Financial Analyst charterholder, and has three Master degrees, namely, a Master of Social Science (Real Estate) and a Master of Social Science (Applied Economics) and a from the National University of Singapore (NUS), and an MBA (Finance) with distinction from New York University. She also holds a Bachelor of Science (Mathematics) from NUS, and has a Certificate of Proficiency in Business Mandarin for Banking Professionals, awarded by Singapore Chinese Chamber Institute of Business.
Jyu Lan has more than 24 years of banking experience gained at various major foreign and local banks covering: a) Interest rate risk management for corporates, b) Derivatives financial engineering (using interest rate, FX and commodities derivatives), c) Corporate/real estate lending / Infrastructure project financing, d) Asset securitization, e) Distressed debt management / restructuring / recovery and, f) Asset/Liability management for banks.
Jyu Lan is currently providing training on financial literacy and interest rate derivatives. In her last held position, Jyu Lan was a Senior Director at a major local bank’s Global Markets Corporate Sales and Advisory, leading a team of 3 Interest Rate Derivative product specialists in assisting a wide range of corporates in interest rate risk management.
Jyu Lan’s diverse and extensive experience in both Corporate lending and Global Markets, equipped her with a good understanding of the workings of the global economy, financial markets and strong skill set on the credit analysis of corporates. Such knowledge, experience and skill sets are essential for making sound stock investment. In 2015, Jyu Lan has conducted several classes on Understanding Bond Investments to over 400 teachers under the SGX-NIE Financial Training program and received positive feedback from the course participants.
For further enquiries, please email firstname.lastname@example.org or call 6327-5438
(Operating Hours: 9.00am to 5.00pm)
Terms and Conditions
Singapore Exchange reserves the right to make changes to the time, date, syllabus, speakers, venue or cancel the course if warranted by circumstances beyond its control.
Cancellation and Transfer Policy
Cancellation for a registration must be made in writing at least 10 business days before the event and a refund (less a 10% administrative fee of total course fee) will be made. No refunds will be given for cancellations received less than 10 business days prior to the event. All requests for replacement must be made in writing at least 3 business days prior to the event.
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