S'pore Savings Bonds to be issued on Oct 1

Singapore

THE Monetary Authority of Singapore (MAS) announced on Tuesday that the Singapore Savings Bonds will be issued on Oct 1, 2015.

Interested investors will be able to apply for these anticipated bonds from Sept 1, said Ravi Menon, MAS managing director at the briefing on the MAS Annual Report 2014/15.

Details of the first issue such as the amount of bonds available and the interest rates offered will be released when applications open.

A new Savings Bond will be issued every month for at least the next five years, so there is no need to rush for the first issuance, said Mr Menon.

Singapore Savings Bonds are a special type of Singapore Government Securities (SGS) for the individual investor. Like regular SGS, they offer long-term, risk-free returns. "Unlike regular SGS, holders of Savings Bonds are not exposed to price risks when they redeem early," he said.

The Savings Bonds are a long-term savings option that offer safe returns for Singaporeans who can and wish to save more for the long-term. They will complement the Central Provident Fund (CPF) system and other savings and investment options.

They can be bought only with cash; SRS or Supplementary Retirement Scheme funds and CPF funds cannot be used to buy Savings Bonds at the moment.

Individuals can start investing with as little as S$500. The overall cap on the individual investor is S$100,000; the cap on any single issue is S$50,000.

MAS deputy managing director Jacqueline Loh said the impact of the Singapore Savings Bonds on the banking sector will be low.

Non-bank deposits of the Singapore banking sector is over S$500 billion. MAS expects to issue between S$2 billion and $4 billion in these bonds this year, depending on demand.

To apply for Savings Bonds, one needs to have a DBS/POSB, OCBC Bank or UOB bank account; the investor will also need an ATM card because applications are made through ATMs. DBS/POSB customers may also apply for Savings Bonds through internet banking.

A Central Depository (CDP) Securities account with Direct Crediting Service (DCS) must be activated. Investors have to be at least 18 to open an individual CDP Securities account.

DBS/POSB is the only bank to allow the public to both apply for and redeem Singapore Savings Bonds through its online banking channel and its ATM network, said DBS.

Jeremy Soo, the bank's managing director and head of consumer banking in Singapore, said: "The savings bonds are good instruments for novice investors to diversify their investments and to learn to invest in a fixed income product.

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

He added: "We commend the MAS's decision to set a minimum investment threshold accessible to the man on the street."

For more information, visit http://www.sgs.gov.sg/savingsbonds or call the hotline 6221-3682.*

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