New Singapore Savings Bonds for retail investors

SINGAPORE - Investors in Singapore Savings Bonds will earn interest linked to long-term Singapore Government Securities (SGS) rates, the Monetary Authority of Singapore said on Monday.

While SGS bonds pay the same interest every year, Singapore Savings Bonds will pay coupons that step up over time.

This means the average interest rate will go up the longer the bonds are held.

The bonds, first announced by Senior Minister of State Josephine Teo last week, will be launched in the second half of the year and issued every month.

Investors will be able to redeem the bonds, which have a maximum term of 10 years, at any time with no penalty. This means that individual investors will always get their principal back in full, along with any interest accrued.

The average interest investors will receive on their Singapore Savings Bonds will match the return on SGS bonds of the same tenure.

Investors will have to put in a minimum of $500 into the bonds, which are targeted at individuals looking to grow their long term savings.

There will be a limit - which will be announced when the bonds are launched - on the maximum amount investors can put in.

In the last 10 years, the 10-year SGS has mostly yielded between 2 and 3 per cent.