Singapore Savings Bond opens for application in September

SINGAPORE - Investors looking for a flexible, low-risk option can apply for the long-awaited for Singapore Savings Bond from September.

Successful applicants will receive their bonds in their Central Depository (CDP) accounts on October 1 when the first issue is released.

A new Savings Bond will be issued every month after that for at least five years so you need not rush for the first issuance, said the Monetary Authority of Singapore (MAS) in a statement today.

The Government plans to issue $2 billion to $4 billion of the bonds this year.

Singapore Savings Bonds are a new type of bond that offers individual investors a safe, long-term and flexible product.

You can apply for each bond issue with as little as $500 and up to $50,000 and hold up to $100,000 of the bonds, which have a 10-year term, at any one time.

The MAS will provide details of the first October Savings Bond issue on its website (www.sgs.gov.sg/savingsbonds) after 4.30pm on Sept 1, such as the interest rate schedule. These details will also be published in newspapers the next day. Applications for the first issue close on Sept 25.

A key feature of the Savings Bond is that they are principal-guaranteed by the Government. And investors enjoy flexibility in that they can redeem their bonds - partially or fully - in any given month before maturity with no penalty for early exit.

Interest is paid half yearly and is on a step-up basis to encourage investors to hold 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 and 3 per cent.

If you want to apply for a Savings Bonds you must have a bank account with participating banks - DBS/POSB, OCBC, UOB - and an individual CDP account with direct crediting service enabled.

You can then apply and redeem Savings Bonds through your ATM. DBS/POSB customers can also use internet banking. There is a $2 non-refundable transaction fee for each application and redemption request.

Mr 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 added.

Mr Jeremy Soo, DBS Bank's managing director and head of its consumer banking group here, said "the savings bonds are good instruments for novice investors to diversify their investment and learn to invest in a fixed income product".

"Unique features include allowing investors to still receive their principal if they redeem early unlike conventional SGS bonds and corporate bonds, where the prices are subject to market interest rate movements and financial market conditions if redeemed before maturity.

"We also commend the MAS decision to set a minimum investment threshold accessible to the man in the street."

In addition to the Savings Bonds website, which has tools to help investors keep track of application timelines and understand the investing returns over different investment periods, you can also call the Savings Bonds hotline at 6221 3682.

lornatan@sph.com.sg