New savings bonds for individual investors to be introduced

SINGAPORE: The Government and Monetary Authority of Singapore (MAS) are planning to introduce a new type of bonds to help individual investors get a better return on their savings, Senior Minister of State for Finance Josephine Teo said on Thursday (Mar 26).

Speaking at the annual conference of the Investment Management Association of Singapore (IMAS), Ms Teo said the planned Singapore Savings Bonds will be safe investments with principal guaranteed by the Government.

These bonds will have two features to make them more attractive for individual investors: The ability to get his or her money back in any given month with no penalty, and interest rates that are linked to long-term Singapore Government Securities rates.

Unlike bonds that pay the same coupon each year, the Singapore Savings Bonds will pay coupons that “step-up” or increase over time, providing investors with a higher return the longer they hold the bonds, she added.

"In short, the Singapore Savings Bonds will offer the higher returns of a long-term bond and give what investors call a term premium, while retaining the flexibility of a shorter-term deposit, and the safety of an instrument guaranteed by the Government," she said.

Ms Teo said the Government and MAS are still working on the details and will release more information later.

- CNA/ac

Temasek Holdings exploring ways to offer bonds to retail investors

SINGAPORE: Temasek Holdings is exploring ways to offer bonds to retail investors in Singapore.

In response to a letter in TODAY newspaper, Temasek's managing director of corporate affairs Stephen Forshaw said this will provide an alternative investment opportunity for those seeking stable returns with lower risks.

The investment firm is looking into how to make it practical and efficient to offer bonds to retail investors.
Mr Forshaw said the firm will share details when ready.
According to its latest annual report, Temasek's bonds have received the top rating from Standard & Poor's Ratings Services and Moody's Investors Service since 2004. Its bonds are usually offered to institutional investors.
The firm's total shareholder return had averaged 16 percent since its inception in 1974. The firm is mostly invested in stocks and shares of companies.
Temasek said it invests for the long term and the total market value of its portfolio can rise or fall by 30 per cent or more, during volatile periods such as the global financial crisis.
"We are mindful that past opportunities and conditions are not likely to repeat in the coming decades. Furthermore, global structural risks remain," added Mr Forshaw. 

- CNA/xq

 

SIA triples size of retail bond offering

Createwealth8888: Looking at huge demand for 5-year SIA bond at 2.15% retail investors are more concerned on Return of Money than Return On Capital.

-----------------------------

This comes on heels of tepid response from institutional investors, some say


By SIOW LI SEN

(SINGAPORE) Singapore Airlines has increased its retail bond offering to $150 million - three times as high as the original allocation of $50 million. This has been done by reducing the amount initially allocated to institutional investors following a lukewarm reception from smart money, BT understands.

SIA's unrated $300 million of 2.15 per cent 5-year bonds with a retail tranche was launched last week to coincide with the Singapore Exchange's (SGX) strategy to offer bond trading to retail investors.

SIA said it will reallocate up to $100 million of the bonds from the placement to the public offer, to satisfy excess demand from that quarter.

This means the $300 million worth of SIA bonds have been sold in equal amounts of $150 million to both retail and institutional investors.

The original allocation was $50 million for retail investors who could apply in minimum lots of $10,000. The placement tranche allocation of $250 million was sold at $100,000 apiece.

'To maximise retail participation, the reallocation feature allowed $100 million of the placement tranche to be reallocated to the public offer.

'Demand on the placement tranche picked up very quickly and when orders crossed $200 million, the placement channels were informed that allocation on the placement tranche was likely to be only $150 million,' said the arrangers of the issue. DBS, OCBC Bank and United Overseas Bank handled the bond issue.

At the close of the public offer on Tuesday, SIA said it had received $346,282,000 in subscription. 'We are very pleased with the response from both retail and institutional investors to the offering,' said SIA spokesman Nicholas Ionides.

All retail investors who applied for the SIA bonds will be allocated all or a portion of their subscription.

Fund managers told BT yesterday that, unlike retail, institutional investors have alternatives, and the SIA bonds pricing was a little too rich.

'Despite the fine credit standing of SIA, I think its 5-year bond at 2.15 per cent is a bit too aggressive,' said Teng Ngiek Lian, chief executive, Target Asset Management Pte Ltd.

'As institutional investors are better informed and have the ability to access other issues, I am not surprised if their response is lukewarm,' he said.

Earlier, in June, SIA sold $500 million of 3.22 per cent 10-year bonds to institutional investors.

Its latest bond sale took place around the same time as Keppel Corp's $500 million of 3.1 per cent 10-year bonds. Keppel Corp did not offer a retail tranche.

'This offering was made in response to demand from institutions for such bond issues. We have no plans at the moment for a retail bond issue, and will review our plans according to market demands,' said Eva Ho, KepCorp assistant general manager, group corporate communications.

CapitaMall Trust in August sold $300 million of 4-year and 7-year bonds, also to institutional investors. They were priced at 2.85 per cent and 3.55 per cent respectively.

SIA's latest bonds were unrated and 'some of the US funds have certain restrictions on the amount they can invest on unrated bonds', said Yueh Ee Lee, Aberdeen Asset Management portfolio manager.

Ms Yueh said local retail investors know SIA well.

'From the retail side, it makes a lot of sense. SIA is a household name - and you know what deposit rates are,' she said.

DBS's savings rates range from 0.1 to 0.25 per cent.

Observers say while bonds have rallied a lot, the bond market remains bullish, given expectations that the current record low interest rates could persist for a while.

Trading of the SIA bonds on SGX starts today.