First SINGA (SGS Infrastructure) bond

[lzydata]

INAUGURAL SGS (INFRASTRUCTURE) NA21200W ISSUANCE ON 1 OCTOBER 2021

MAS will issue the first Singapore Government Securities (SGS) under the Significant Infrastructure Government Loan Act (SINGA) on 1 October 2021. The inaugural SGS (Infrastructure) will be a new 30-year benchmark bond, NA21200W. The 2021 SGS issuance calendar on the MAS website has been updated to incorporate this new SGS (Infrastructure) issuance (https://www.mas.gov.sg/bonds-and-bills/auctions-and-issuance-calendar).

2 MAS will announce the issuance size five business days before the auction on 28 September 2021.

https://www.mas.gov.sg/-/media/MAS/SGS/Inaugural-SGS-Infrastructure-Issuance-NA21200W.pdf

Looks like it will be open to retail investors like traditional SGS - now called "SGS (Market Development)".

 

[revhappy]

Stay away from these unless you are looking for some kind of annuity payout.

 

[lzydata]

It is extremely long term and will probably have a very low* yield, but not sure why you say "annuity payout".

* By "low" I mean 1.7% pa, the latest market yield for 30 year SGS. Low for a long term investment.

 

[bruiser69]

1.7% is still quite good

 

[lzydata]

Announcement date - 21 Sep 2021
Auction date - 28 Sep 2021
Issue date - 01 Oct 2021
Maturity date - 01 Oct 2051

Total amount offered - S$2.6 billion

Yield and price - To be determined at auction

Auction: NA21200W 30-Year Bond (New)

https://www.mas.gov.sg/bonds-and-bi...nds?issue_code=NA21200W&issue_date=2021-10-01
As of yesterday, 30 year SGS was trading at 1.89% yield.

 

[katana71]

wonder how illiquid it will be

 

[lzydata]

wonder how illiquid it will be

No doubt even more illiquid than regular SGS, which is illiquid enough. First issuance of a long-term AAA rated bond, many institutions will want to buy and hold.

 

[Chua Zhiming]

less than 2% for 30 years?? what is the point of buying this?

 

[reddevil0728]

less than 2% for 30 years?? what is the point of buying this?

II got different considerations from retail

 

[qhong61]

less than 2% for 30 years?? what is the point of buying this?

Is it they will pay u the interest every year? How and when can cash out the captial?

 

[lzydata]

Is it they will pay u the interest every year? How and when can cash out the captial?

Yes interest is paid out twice yearly, 1 October and 1 April. Cashing out before maturity will be the problem. All SGS bonds are listed on SGX but volumes are very low. The alternative is to go to the dealer banks, the 3 local banks.

Possibly it could be a small part of one's bond allocation in a SRS account where the accountholder is still young and cannot withdraw the money anyway.

This is where SSB wins over long term SGS, as the investor can redeem them anytime and guaranteed at par.

 

[qhong61]

Yes interest is paid out twice yearly, 1 October and 1 April. Cashing out before maturity will be the problem. All SGS bonds are listed on SGX but volumes are very low. The alternative is to go to the dealer banks, the 3 local banks.

Possibly it could be a small part of one's bond allocation in a SRS account where the accountholder is still young and cannot withdraw the money anyway.

This is where SSB wins over long term SGS, as the investor can redeem them anytime and guaranteed at par.

Meaning can only cash out in 2051?

 

[reddevil0728]

Meaning can only cash out in 2051

If u can’t find a buyer

 

[qhong61]

If u can’t find a buyer

Difficult to find?

 

[kokjj87]

Hmmm. Not worth it for me.

 

[lzydata]

Difficult to find?

Means you can try to sell it but not find buyers in the market, just like illiquid stocks.

So that is the main risk for individuals buying such a long term bond - if you really need to sell, hard to liquidate.
Also possible that it will drop below par, if the interest rate environment ever returns to normal.

 

[qhong61]

Hmmm. Not worth it for me.

Why?

 

[qhong61]

Means you can try to sell it but not find buyers in the market, just like illiquid stocks.

So that is the main risk for individuals buying such a long term bond - if you really need to sell, hard to liquidate.
Also possible that it will drop below par, if the interest rate environment ever returns to normal.

Is the interest rate fixed?
So must have holding power for at least twenty yrs then worth buying?

 

[reddevil0728]

Is the interest rate fixed?
So must have holding power for at least twenty yrs then worth buying?

Fixed at the time of purchase

I think the consideration for worth buying is more than just the ability to hold for twenty years

 

[sgbird]

The SGS bond interest rate tooooooooooooo low