Singapore SGS Bond

[Agate8]

With SSB, you can redeem directly with MAS, and - crucially - you can always redeem at par, with accrued interest. So if you bought it for $1k, you won't get less than $1k. (Except for the $2 fee.)

SGS: you are selling the bond to a dealer or the secondary market and you might lose money depending on what the market price is.

Question:
In this case why do people choose SGS over SSB? If the duration & yield is the same or almost, what is the appeal in SGS then?

 

[sglandscape]

Question:
In this case why do people choose SGS over SSB? If the duration & yield is the same or almost, what is the appeal in SGS then?

No 200k cap, if rates drop can sell at a gain.

 

[DevilPlate]

Question:
In this case why do people choose SGS over SSB? If the duration & yield is the same or almost, what is the appeal in SGS then?

For big fish, 200k cap SSB waste time

 

[reddevil0728]

Yes, i think so since closing is due tomorrow. Almost wanted to buy $100K worth.

Initially, tried SGS Savings bonds but i cant buy with CPF, so went to next product. Haiz...

What you mean sgs savings bond?

I mean have to take personal responsibility for not reading lor

 

[ahnyaahnya]

Question:
In this case why do people choose SGS over SSB? If the duration & yield is the same or almost, what is the appeal in SGS then?

SGS will have capital appreciation if interest rates fall.

 

[lzydata]

Question:
In this case why do people choose SGS over SSB? If the duration & yield is the same or almost, what is the appeal in SGS then?

In addition to what others have said, about the $200k cap, SSB is only available to individuals. Therefore institutions would naturally prefer SGS. Some institutions such as insurance companies have long-term liabilities that they need to match with long-term assets so long-term bonds make sense for them.

 

[lzydata]

Auction: N522100N 5-Year Bond (Reopened)​

Total Amount AllottedS$1.5 billion
Amount Allotted to Non-Competitive ApplicationsS$65.0 million
Amount Allotted to MASS$0.0 million
Total Amount AppliedS$2.7 billion
% of Competitive Applications at Cut-off AllottedApproximately 13%
% of Non-Competitive Applications Allotted100%
Bid-to-Cover Ratio1.81

Yield and Price​

Cut-off Yield 3.09% p.a.
Cut-off Price 99.292
Median Yield 3.03% p.a.
Median Price99.489
Average Yield 3% p.a.
Average Price99.588

https://www.mas.gov.sg/bonds-and-bi...nds?issue_code=N522100N&issue_date=2024-03-01

Auction: NA16100H 20-Year Bond (Reopened)​

Total Amount AllottedS$2.1 billion
Amount Allotted to Non-Competitive ApplicationsS$315.4 million
Amount Allotted to MASS$200.0 million
Total Amount AppliedS$4.5 billion
% of Competitive Applications at Cut-off AllottedApproximately 24%
% of Non-Competitive Applications Allotted100%
Bid-to-Cover Ratio2.13

Cut-off Yield 3.08% p.a.
Cut-off Price 94.755
Median Yield 3.02% p.a.
Median Price95.683
Average Yield 2.92% p.a.
Average Price97.255

https://www.mas.gov.sg/bonds-and-bi...nds?issue_code=NA16100H&issue_date=2024-03-01

 

[philips107]

Auction: N522100N 5-Year Bond (Reopened)​

Total Amount AllottedS$1.5 billion
Amount Allotted to Non-Competitive ApplicationsS$65.0 million
Amount Allotted to MASS$0.0 million
Total Amount AppliedS$2.7 billion
% of Competitive Applications at Cut-off AllottedApproximately 13%
% of Non-Competitive Applications Allotted100%
Bid-to-Cover Ratio1.81

Yield and Price​

Cut-off Yield 3.09% p.a.
Cut-off Price 99.292
Median Yield 3.03% p.a.
Median Price99.489
Average Yield 3% p.a.
Average Price99.588

https://www.mas.gov.sg/bonds-and-bi...nds?issue_code=N522100N&issue_date=2024-03-01

Auction: NA16100H 20-Year Bond (Reopened)​

Total Amount AllottedS$2.1 billion
Amount Allotted to Non-Competitive ApplicationsS$315.4 million
Amount Allotted to MASS$200.0 million
Total Amount AppliedS$4.5 billion
% of Competitive Applications at Cut-off AllottedApproximately 24%
% of Non-Competitive Applications Allotted100%
Bid-to-Cover Ratio2.13

Cut-off Yield 3.08% p.a.
Cut-off Price 94.755
Median Yield 3.02% p.a.
Median Price95.683
Average Yield 2.92% p.a.
Average Price97.255

https://www.mas.gov.sg/bonds-and-bi...nds?issue_code=NA16100H&issue_date=2024-03-01

Wow, the yield for the 5 yr is pretty good, went above 3%

 

[BBCWatcher]

Wow, the yield for the 5 yr is pretty good, went above 3%

It's a little shorter than that because it was reopened: about 3 1/2 years to maturity.

 

[philips107]

It's a little shorter than that because it was reopened: about 3 1/2 years to maturity.

ah i see, thanks for the explaination!

 

[Nofear40]

Question:
In this case why do people choose SGS over SSB? If the duration & yield is the same or almost, what is the appeal in SGS then?

Can use cpf

 

[magicming]

Today’s SGS 10 year bond auction not bad. 3.46%

Total Amount AllottedS$2.9 billion
Amount Allotted to Non-Competitive ApplicationsS$507.7 million
Amount Allotted to MASS$300.0 million
Total Amount AppliedS$5.8 billion
% of Competitive Applications at Cut-off AllottedApproximately 68%
% of Non-Competitive Applications Allotted100%
Bid-to-Cover Ratio1.99

Yield and Price​

Cut-off Yield 3.46% p.a.
Cut-off Price 99.287
Median Yield 3.44% p.a.
Median Price99.454
Average Yield 3.33% p.a.
Average Price100.38

 

[vsvs24]

Today’s SGS 10 year bond auction not bad. 3.46%

Total Amount AllottedS$2.9 billion
Amount Allotted to Non-Competitive ApplicationsS$507.7 million
Amount Allotted to MASS$300.0 million
Total Amount AppliedS$5.8 billion
% of Competitive Applications at Cut-off AllottedApproximately 68%
% of Non-Competitive Applications Allotted100%
Bid-to-Cover Ratio1.99

Yield and Price​

Cut-off Yield 3.46% p.a.
Cut-off Price 99.287
Median Yield 3.44% p.a.
Median Price99.454
Average Yield 3.33% p.a.
Average Price100.38

Much better than the 5 years SGS new bond 2 weeks ago.

I was tempted to apply this. But decided not to as 10 yrs is quite long and I might need to use my funds for family's medical expenses. Not sure how easy to sell.

 

[Laneige]

For reopened bonds... since it is reopened it means that there is already an auction earlier. and that auction earlier determined what the coupon rate is.

in this case it is 1.25%.

if you submit a bid now and u bid say 1.5%. and the auction ends up being 1.5%, you actually get a discount off the face value that you put in such that the coupon rate of 1.25% + the discount you get, gets you an effective yield of 1.5%.

I v confused over this
I went to se ocbc the buying price is 1.15$ For one reopen but I think is maturity 2026?

so “guarantee” is +1.25% pa?

then if we bid the competitive eg 2% how do I calculate the interest assuming it’s just one yr for easy reference

$1000x1.25%+$1000x2%-cost $1.15x1000 ? The balance is the interest earned?
Really clueless so calc can be all wrong
Thanks

 

[Laneige]

Today’s SGS 10 year bond auction not bad. 3.46%

Total Amount AllottedS$2.9 billion
Amount Allotted to Non-Competitive ApplicationsS$507.7 million
Amount Allotted to MASS$300.0 million
Total Amount AppliedS$5.8 billion
% of Competitive Applications at Cut-off AllottedApproximately 68%
% of Non-Competitive Applications Allotted100%
Bid-to-Cover Ratio1.99

Yield and Price​

Cut-off Yield 3.46% p.a.
Cut-off Price 99.287
Median Yield 3.44% p.a.
Median Price99.454
Average Yield 3.33% p.a.
Average Price100.38

But this one selling price can be lower right if never keep to maturity ? Sell on market ?

 

[lzydata]

I v confused over this
I went to se ocbc the buying price is 1.15$ For one reopen but I think is maturity 2026?

so “guarantee” is +1.25% pa?

then if we bid the competitive eg 2% how do I calculate the interest assuming it’s just one yr for easy reference

$1000x1.25%+$1000x2%-cost $1.15x1000 ? The balance is the interest earned?
Really clueless so calc can be all wrong
Thanks

You can try to see this SGS Bond Calculator page from MAS for better understanding:

https://www.mas.gov.sg/bonds-and-bi...?issue_code=N521100V&maturity_date=2026-11-01

For such reopened bonds, the coupon rate is already set. Instead, the price/yield at which you buy the bond varies.

And also you must account for accrued interest, which is the interest accumulated between the last payment date and the next payment date. For this case, the payment dates are 1 May and 1 Nov every year, so it is the accrued interest from 1 May to 3 Jun, the issue date.

Keying in Settlement Date 3 Jun 2024 and Price of $95, I get Yield to Maturity of 3.43% pa and Estimated Amount You Will Pay as $951.10 for $1k worth of the bond.

It means you are paying $951.10 now for $1k face value of the bond. You will receive interest of $6.25 on 1 Nov 2024, 1 May 2025, 1 Nov 2025, 1 May 2026 and 1 Nov 2026 [i.e. $12.50 per $1k per year or 1.25% pa], and the principal of $1k on 1 Nov 2026.

If you find this too confusing, best not to deal with reopened SGS bonds. Just go for alternatives like SSB or FD.

 

[Laneige]

You can try to see this SGS Bond Calculator page from MAS for better understanding:

https://www.mas.gov.sg/bonds-and-bi...?issue_code=N521100V&maturity_date=2026-11-01

For such reopened bonds, the coupon rate is already set. Instead, the price/yield at which you buy the bond varies.

And also you must account for accrued interest, which is the interest accumulated between the last payment date and the next payment date. For this case, the payment dates are 1 May and 1 Nov every year, so it is the accrued interest from 1 May to 3 Jun, the issue date.

Keying in Settlement Date 3 Jun 2024 and Price of $95, I get Yield to Maturity of 3.43% pa and Estimated Amount You Will Pay as $951.10 for $1k worth of the bond.

It means you are paying $951.10 now for $1k face value of the bond. You will receive interest of $6.25 on 1 Nov 2024, 1 May 2025, 1 Nov 2025, 1 May 2026 and 1 Nov 2026 [i.e. $12.50 per $1k per year or 1.25% pa], and the principal of $1k on 1 Nov 2026.

If you find this too confusing, best not to deal with reopened SGS bonds. Just go for alternatives like SSB or FD.

Ya I see the calculator before I came in n even more confused!
I go n try to digest yr post

 

[hwckhs]

Ya I see the calculator before I came in n even more confused!
I go n try to digest yr post

For new SGS bond, the coupon rate is set close to the cut-off yield (rounded to nearest 0.125%), and cut-off-price is close to 100.

However, for re-open bond, you can't change the coupon rate. The 1.25% coupon was already set in 2021 during its first auction. See https://www.mas.gov.sg/bonds-and-bi...?issue_code=N521100V&maturity_date=2026-11-01 - look at the auction history at the page bottom.

Today's interest rate is much higher (3%+) but this bond is only paying 1.25% coupon. To compensate for this, the price will have to be lower than its original cut-off price in its first auction in 2021 (close to 100), ie. discounted.

Keying in Settlement Date 3 Jun 2024 and Price of $95, I get Yield to Maturity of 3.43% pa and Estimated Amount You Will Pay as $951.10 for $1k worth of the bond.

Expanding on Izydata's example, if the cut-off price is determined to be $95 in this new auction, it will yield 3.43%.

This 3.43% is guaranteed (if held to maturity), and realized in 2 ways:

1. Regular coupons (1.25% pa)
2. Discounted price of $95 against the original cut-off price (close to $100). This is similar to T-bill, which you buy at a discount.

 

[y2j_chan]

Why we can still choose competitive bid, if 3.43% is guaranteed?

For this bond, we would be paid 5 times half year divided right?

For new SGS bond, the coupon rate is set close to the cut-off yield (rounded to nearest 0.125%), and cut-off-price is close to 100.

However, for re-open bond, you can't change the coupon rate. The 1.25% coupon was already set in 2021 during its first auction. See https://www.mas.gov.sg/bonds-and-bi...?issue_code=N521100V&maturity_date=2026-11-01 - look at the auction history at the page bottom.

Today's interest rate is much higher (3%+) but this bond is only paying 1.25% coupon. To compensate for this, the price will have to be lower than its original cut-off price in its first auction in 2021 (close to 100), ie. discounted.


Expanding on Izydata's example, if the cut-off price is determined to be $95 in this new auction, it will yield 3.43%.

This 3.43% is guaranteed (if held to maturity), and realized in 2 ways:

1. Regular coupons (1.25% pa)
2. Discounted price of $95 against the original cut-off price (close to $100). This is similar to T-bill, which you buy at a discount.

 

[hwckhs]

Why we can still choose competitive bid, if 3.43% is guaranteed?

3.43% is just an example. I was addressing OP's confusion: so “guarantee” is +1.25% pa? .
Please read the above posts in full.

For this bond, we would be paid 5 times half year divided right?

Yes, as mentioned in Izydata's post.