Singapore Savings Bonds

[Kojo0403]

“One of these things is not like the others....”

This one makes absolutely no sense as an investment. Why are bonds from issuers in Asia(*) better than bonds from issuers who happen to be located on other continents? I have no idea! This is a speculative instrument. Really, really speculative since these issuers are issuing bonds denominated in U.S. dollars, which is not the currency they use for day to day commerce or tax collections in any of these countries.

(*) Weirdly defined Asia, no less. Evidently the world’s third largest national economy, which is definitely in Asia according to cartographers, now isn’t part of Asia.

Asian US dollar bonds provided higher yields, overall compared to US and European corporate bonds. Located in Singapore, I feel more comfortable investing in Asia Bonds compared to Latin America or South Africa USD bond which could probably offer similar. And why USD? I prefer not to gain exposure to emerging market currencies.

 

[Perisher]

I’m putting my $$ on SIA bonds but who knows if it will default.

Only put a sum when SSB was 2%+... when it fell below 2%, never put $$ in anymore.

 

[BBCWatcher]

Asian US dollar bonds provided higher yields, overall compared to US and European corporate bonds.

That’s because they’re a lot riskier.

Located in Singapore, I feel more comfortable investing in Asia Bonds compared to Latin America or South Africa USD bond which could probably offer similar.

Why? Mongolia is “better” than Romania? Why wouldn’t you want the greater diversity in a global bond fund versus a mere regional one? We’ve actually had an Asian Financial Crisis. Regional crises are rather more common than global ones.

And why USD? I prefer not to gain exposure to emerging market currencies.

Sorry then, you have loads of emerging market currency risk in that fund. The currency risks are simply loaded into default risks. The Philippine government cannot raise taxes in U.S. dollars, not much anyway. They raise taxes in Philippine pesos. Their ability to service U.S. dollar denominated debt critically depends on the peso-U.S. dollar exchange rate. When the peso devalues, it’s that much tougher to service. And all of that is why Apple (a private company, not a government) can borrow U.S. dollars at a much lower cost than the Philippine government.

Shiny Things has explained all this before, and I agree with him: this fund, and others like it, is purely speculative. It has no legitimate role to play in a general, long-term investment portfolio. If you want to speculate on cross-currency scruffy debt markets then that’s up to you, but that’s not what most people should be doing.

 

[P R N D]

I’m putting my $$ on SIA bonds but who knows if it will default.

Only put a sum when SSB was >2%+... when it fell below 2%, never put $$ in anymore.

The only 2.01% SSB was 2019JAN issued, subscribed in 2018 Dec.

That's the highest SSB. No more seeing >1.99% rate after that.

Edit: Offering Rate for 1st year(cycle).

Sent from Mercedes-Benz E250 using GAGT

 

[havetheveryfun]

The only 2.01% SSB was 2019JAN issued, subscribed in 2018 Dec.

That's the highest SSB. No more seeing >1.99% rate after that.

Sent from Mercedes-Benz E250 using GAGT

nope.. there were few ~2.5% avg yield before that

just that couldnt get full amt for most when subscribing

 

[wutawa]

Yup, my 2018 ssb are 2.43 2.63 2.57%, yet still not the highest hor

 

[reddevil0728]

nope.. there were few ~2.5% avg yield before that

just that couldnt get full amt for most when subscribing

he the poster mentioned "after that"

 

[peacefulday]

The only 2.01% SSB was 2019JAN issued, subscribed in 2018 Dec.

That's the highest SSB. No more seeing >1.99% rate after that.

Sent from Mercedes-Benz E250 using GAGT

Just received my 5th cycles at yield 3.4% from this May onwards, SSB Nov 2015.

 

[P R N D]

nope.. there were few ~2.5% avg yield before that

just that couldnt get full amt for most when subscribing

Yup, my 2018 ssb are 2.43 2.63 2.57%, yet still not the highest hor

Just received my 5th cycles at yield 3.4% from this May onwards, SSB Nov 2015.

Errrr...

I mean the first year offering rate when open for subscription to investors.

2019JAN SSB 2.01% first year.

Sent from Mercedes-Benz E250 using GAGT

 

[Perisher]

Only those avg above 2%... in case anyone is unsure what I’m referring to.

 

[peacefulday]

Errrr...

I mean the first year offering rate when open for subscription to investors.

2019JAN SSB 2.01% first year.

Sent from Mercedes-Benz E250 using GAGT

On the tenth year, SSB Nov 2015 will be at 3.83%. Fully allocated as not popular during initial few launching.

 

[Perisher]

On the tenth year, SSB Nov 2015 will be at 3.83%. Fully allocated as not popular during initial few launching.

I’m only counting the average of 10 years since most of the SSB starts becoming decent after 1-2 years. Doesn’t matter.

 

[polyglob]

Just received my 5th cycles at yield 3.4% from this May onwards, SSB Nov 2015.

Me also. This one good.

 

[P R N D]

On the tenth year, SSB Nov 2015 will be at 3.83%. Fully allocated as not popular during initial few launching.

Errrr....

Topic was the highest SSB offering rate for subscription.


SSBJAN2019 - 2.01%
Oversubscribed
Allocation $39.5k - $39k max

I bided $50k only get $39k

Sent from Mercedes-Benz E250 using GAGT

 

[Cryophoenix]

Interest rates very bad these days.

 

[ilovesalmon]

ya lor, it is so bad that fixed d or endowment plans better sia

 

[henrylbh]

Interest rates very bad these days.

If willing to hold for full 10 years and with little risk*, go for SIA MCB which give far superior rates at between 4.00% and 6.09% than SSB.

Then hope for redemption** instead of conversion of MCB to SIA shares at end of 10 years, unless SIA trade above conversion price of $4.84 from date of conversion.

* risk is SIA exercises option to convert MCB to share at end of 10th year when the share is trading below $4.84 or SIA uplorry. If SIA trades below $4.84, then yield of 6.06% will fall according to price of SIA share. If SIA trades above $4.84 by then, that's an extra bonus on yield.

** SIA has option to redeem MCB at half yearly interval before end of 10 years.

 

[wutawa]

Investment with risk of capital loss may not be suitable for ppl who look at ssb

 

[BBCWatcher]

If willing to hold for full 10 years and with little risk*, go for SIA MCB which give far superior rates at between 4.00% and 6.09% than SSB.

Henry, a 4+% bond obviously involves significant risk. That’s a junk bond, which isn’t even remotely comparable to a AAA rated general government debt obligation.

There’s little risk of seeing the skies empty of aircraft flying in Singapore Airlines colors, true. There’s a great deal of risk that these bonds will default. “Just look at the yield.”

Hyflux was/is illustrative. Singapore needs potable water, and there might even be a zombie or restructured entity notionally named Hyflux involved in its provision. But bond holders are out of luck. There were some bond holders who lied to themselves, thinking “Hyflux is so important to the nation” and variations thereof. Water is important to the nation, and maybe even the Singapore Airlines brand (perhaps). Specific bonds and yield chasing bond holders? No, not at all. Air Canada is at least as important to Canadian national pride, and its shareholders were wiped out and bond holders almost the same. But the Maple Leaf still flies.

If you do want something multi-year that’s reasonably safe and higher yielding than SSBs then you might consider a fixed deposit-like endowment plan, offered in 2 to 5 year terms typically. Those only really work if you’re saving for a major expense that happens to coincide with maturity, such as a university tuition bill.

 

[vsvs24]

I posted this in another thread. Rather than buy SSB at such low rates over 10 years, might want to consider Maybank 3 year FD at 2.05% p.a.

Best to keep to SDIC limits.

https://sslsecure.maybank.com.sg/cg...1.2086936469.1589603647-1006659421.1570846813

Maybank have 2 types of FD for 3 years at 2.05% per annum.

1. Singapore Dollar Time deposit. Min $10,000. Get interest at the end of 3 years.

2. Isavvy Time deposit. Min $25,000. Get some interest upfront ie the next day of account opening. The rest at the end of 3 years. Need to have a Maybank savings account so that they can deposit the interest.

If you have existing Maybank account, can place the FD using internet banking.

I find 3 years a bit long. So I place 3 FD of $10,000 each (the first type). Total $30,000. Just in case I need the money for some unforseen reason, I can withdraw say 1 FD of $10,000 without affecting the other $20,000.

Thankfully can do it easily using internet banking. If do at bank counter, think the bank staff eyes will roll.