Both are bonds issued by the MAS for the Singaporean government. They are considered risk-free as the Singapore government has an AAA credit rating (the highest possible rating). Bonds are issued by governments to investors as a way of borrowing money to fund public spending (among other reasons).
Singapore Government Securities come in the form of Treasury bills (T-bills) or SGS bonds. T-bills mature within 12 months, whereas SGS bonds have maturities of 2-30 years. Suitable for investors who want:
✅ A fixed interest rate and a maturity of 6 months to 30 years
✅ To be able to trade on the secondary market
✅ No investment limit
✅ To invest using either cash, SRS or CPFIS funds
To purchase, you will need:
Competitive - you bid on it based on a specific yield that you want, expressed in percentage terms, up to two decimal places.
Non-competitive - you bid based on the amount you wish to invest, not the yield. Suitable for those who are not fussy about the exact yield they receive.
Either bidding in a primary auction or trading through the secondary market buys Singapore Government Securities. Primary auction applications can be done through:
You’ll be able to tell whether you were successful or not on the MAS website roughly an hour after the auction has closed. SGSs are issued to successful bidders three days after the auction.
Current SGS Yields:
Accurate as of August 2023
Suitable for investors who want:
✅ Flexibility with their investment
✅ Increasing interest rates the longer they hold (max 10-year maturity)
✅ A maximum investment of $200,000
✅ To use cash or SRS funds
✅ Do not want a penalty for early redemption
To purchase, you will need:
Each month, on the first business day, a new Singapore Savings Bond is issued. Applications can be made through:
The application window closes on the fourth last business day of the month. You’ll be able to tell whether you were successful or not on the MAS website on the third last business day of the month. SSBs are issued on the first business day of the next month.
Current SSB Yields:
Accurate as of August 2023
Tax Exemption 🚨
A reminder that because there is no capital gains tax in Singapore, all gains made from investing in bonds are exempted from tax!
You can buy bonds either in the primary market, where the bond is created and priced at face value, or through the secondary market via a bank or broker which may have the bond in its inventory or, in some cases, through a regulated exchange (e.g. the Singapore Exchange), assuming there is a seller. The secondary market purchasing process, if through an exchange, is very similar to buying shares through a brokerage platform, meaning it will involve brokerage fees. Any bonds purchased are reflected in your SGX CDP account. Buying from a bank or broker, on the other hand, would involve paying the spread between bid and offer prices.
You can either receive the principal at maturity or sell it on the secondary market before maturity (assuming that there is a buyer). Of course, if the issuer of your bond defaults before it reaches maturity, then you may receive nothing.
BONDS: SGSs and SSBs. COMPLETED. ✅