The much-awaited Singapore Savings Bond will be open for application in September 2015. Investors looking for an opportunity to grab these bonds can submit their applications for the first issue on September 1st up till September 25th. The bonds will be issued at S$500 up to S$50,000 which have a term of 10 years. Investors can hold up to S$100,000 of bonds. The minimum threshold of S$500 makes it available to the everyday man and not just the elite.
Application process for Singapore Savings Bond
In order to apply for these bonds, you need to have an account at any of the participating banks. The banks are OCBC, DBS, POSB, and United Overseas Bank.
You also need an individual central depository account (CDP).
Applications can be done via ATMs. POSB or DBS customers can also apply via online banking.
The transaction fee is S$2 per application and is non-refundable.
Applicants who are successful will receive the bonds into their CDP on 1st October.
The same process also applies for redemption of the bonds.
The Monetary Authority of Singapore (MAS) has stated that there is no need to rush for the first issue as the bonds will issued every month for at least five years. The Government has plans to issue bonds of S$2billion to S$4billion this year.
The Singapore Savings bonds will give investors flexibility with the tenures and amounts they can deposit. It’s also a low-risk option as your principal amount is guaranteed by the Government. Investors can redeem the bonds in part or full before the maturity date. No penalty fees is levied for premature closure. The return on these bonds at the time of maturity will be the same as a 10-year Singapore Government Securities yield. This is usually around 2% and 3% which is much higher than a fixed deposit. Interest will be paid half-yearly and on a step-up basis. Step-up basis means the value of the bond will be the higher market value at the time of maturity and not the value at which it was originally purchased. In the case of conventional SGS bonds and corporate bonds, the prices of your bond in the case of early redemption is determined by the financial market conditions and the market interest rate movements. These measures are directed to encourage investors to keep the bonds for 10-year terms. But the bonds are also easily redeemable for cash without any penalties, and moreover, you will get your full principal back, making it an attractive investment. In the event of an emergency, the savings bonds will serve as a contingency fund.
MAS will publish all details regarding the first issue of Savings Bonds in October on their website on September 1st after 4:30 p.m. Details such as the interest rate schedule will be available. The same will be published in newspapers on September 2nd. The Savings Bond website will help investors track their applications and depict their investment returns over the period of the bond. There is also a Savings bond hotline available to investors and applicants.