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Savings Bonds of up to S$2b to be offered in 2017: MAS

Friday, December 2, 2016 - 05:50
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The Monetary Authority of Singapore (MAS) said on Thursday that up to S$2 billion of 10-year Savings Bonds will be offered in 2017.

Singapore

THE Monetary Authority of Singapore (MAS) said on Thursday that up to S$2 billion of 10-year Savings Bonds will be offered in 2017.

The first Savings Bond of 2017 will be issued on Jan 3, and up to S$150 million will be available. A new Savings Bond will continue to be issued every month, it said.

The Savings Bond for January 2017 is offering an interest rate of 0.91 per cent for the first year.

Next year's offering is half of that offered for 2016. Applications this year have been slow although, with interest rates on the rise, they may pick up.

When the first Savings Bonds went on sale in October 2015, interest was relatively higher, with S$413.2 million issued. The quantum fell to S$257.3 million and S$41 million for November 2015 and December 2015, respectively.

Issuance this year continued to be small in line with falling interest rates.

The smallest issuance was in November at S$12.8 million, coinciding with the lowest interest rate of the year of 0.77 per cent for the first year. The highest interest rate in 2016 was 1.21 per cent for January. December issuance recovered slightly to S$13.8 million, and the interest rate for the first year is 0.87 per cent.

"With interest rates rising, this might motivate more depositors to consider Savings Bonds as an option for their funds," said Gregory Choy, head of wealth advisory, OCBC Bank.

Those who are currently invested in the existing Savings Bond can choose to redeem and reinvest in the new higher-paying tranche to enjoy the higher rate, he said.

Interested investors must have an Individual Central Depository (CDP) Securities account with Direct Crediting Service (DCS) activated to apply for the Savings Bond.

CDP helps investors keep track of their Savings Bond holdings and facilitates the crediting of Savings Bond interest payments into investors' bank accounts. Investors who already have Individual CDP Securities accounts should check that DCS has been activated before applying for Savings Bonds.

Applications can be made through DBS/POSB, OCBC and UOB ATMs, or through DBS/POSB's Internet Banking portal.

Individuals can apply for a maximum of S$50,000 per issuance, and a maximum of S$100,000 for all Savings Bonds.

Interest is paid every six months.

The issuance calendar for 2017, which sets out the application and issuance dates, can be found on the Savings Bond website: http://www.sgs.gov.sg/savingsbonds