Investors looking for a flexible, low-risk option can apply for the long-awaited Singapore Savings Bonds from September.
Applications for the first issue open on Sept 1 and close on Sept 25. Successful applicants will get the bonds credited into their central depository (CDP) accounts on Oct 1.
A new Savings Bond will be issued monthly for at least five years, so there is no need to rush for the first issuance, the Monetary Authority of Singapore (MAS) said yesterday. The Government plans to issue between $2 billion and $4 billion of these bonds this year.
A key feature of the bonds is that they are principal-guaranteed by the Government.
Investors enjoy flexibility in that they can redeem their bonds - partially or fully - in any given month before maturity with no penalty charged for early exit. Interest is paid half-yearly and is on a step-up basis to encourage investors to hold the bond for 10 years.
The return for holding a bond until maturity will match the average 10-year Singapore Government Securities yield, which has been between 2 per cent and 3 per cent.
Those applying for the bonds must have an account with the participating banks - DBS/POSB, OCBC and United Overseas Bank - and an individual CDP account, where the direct crediting service is enabled.
Application and redemption of the Savings Bonds are done through the ATM. DBS/POSB customers can also use Internet banking. There is a $2 non-refundable transaction fee for each application and redemption request.
Each application can be for as little as $500, while the maximum is $50,000. At any one time, an individual can hold $100,000 of the bonds, which have a 10-year term.
The MAS will provide details of the first October Savings Bond issue, such as the interest rate schedule, on its website (www.sgs.gov.sg/savingsbonds) after 4.30pm on Sept 1. The details will also be published in newspapers the next day.
Investor Henry Lim, 56, said he plans to set aside $50,000 in Savings Bonds as they are safe and the returns are "decent". "It is almost like having cash at hand as I can redeem the bonds for cash with no penalty, if the need arises," he said.
Apart from the website, there is a hotline on 6221-3682.
