Singapore SGS Bond

[sohguanh]

This new thread is for all discussion on SGS bonds (Reopen) (New). Reason why split is becuz readers may get confused whether they are talking about SGS bonds or the 6,12 months T-bill in the other Singapore Treasury bill (T-bills) thread

For ppl who want to know about T-bill please refer to the other thread https://forums.hardwarezone.com.sg/threads/singapore-treasury-bills-t-bills.6769601/

For ppl who want to know about Singapore Savings Bond please refer to the other thread
https://forums.hardwarezone.com.sg/threads/singapore-savings-bonds.5006693/
This thread is for the SGS Bond.

 

[stephenbishop]

In many ways similar to SGS t-bills but with some important differences.

The main differences, for both competitive and non-competitive bids, are as follows to the best of my recollection:

1. Can make as many bids as you wish but the aggregate of all bids maximum per individual is SGD 2 million per auction.
2. For reopened SGS bonds only, the amount deducted from your account at the point of bidding is 115% of the amount you want to invest. If you are successful, you will be refunded the following amount generally on the same day the auction closes: 115% - cut-off price - accrued interest from last interest payment date to date of issuance of the reopened bond. For original issue bonds, the amount deducted from your account at the point of bidding will be the amount you intend to invest.
3. Interest will be the nominal bond coupon and will be paid on the interest payment date(s).
4. The nominal value (i.e. the face value) of the SGS bond will be redeemed on maturity of the bond.

The above are the main differences I recall compared with SGS t-bills. The other requirements I think are similar to SGS t-bills - at least to the best of my recollection.

Hope this helps but I would advice that any potential investor refer to the official source on the full requirements (https://www.mas.gov.sg/bonds-and-bills/Singapore-Government-Bonds-Information-for-Individuals).

I think for two reasons. One, as you said, because the cut-off price may be higher than face value and two, because of the accrued interest from last interest payment date to date of issuance. This is my reasoning and I maybe wrong -I don't think there is an official reason provided to require the 15% buffer for reopened bonds.


Exactly the same as SGS T-bill. You bid the cut-off yield for competitive bids.The coupon is not relevant in the bidding process. The cut-off yield determines the cut-off price.

Sorry I missed directly answering this question . You put in 115% and you get refunded on the same day the auction closes 115% - cut-off price (A) - accrued interest from last interest payment date to date of issuance of the reopened bond (B). The amount in (B) is effectively refunded to you at the first interest payment date after re-issuance as you receive the full amount of the coupon (not prorated to the time since your acquisition).

So effectively you end up getting refunded 115% - cut-off price (mostly on the same date as the auction closes and the accrued interest portion (B) on the date of the first coupon payment after re-issuance).

Depends on the coupon rate. If the coupon rate is lower than the "market" rate (= cut-off yield), the cut-off price will be lower than face value.

You are protected (i.e. you will be unsuccessful in your bid) if the cut-off yield is lower than the cut-off yield you entered in your competitive bid. In other words, you will not be forced to invest if the cut-off yield is lower than your required yield.

Not sure I would put it that way. If the actual coupon is higher than the cut-off yield you will pay a cut-off price higher than face value. If the actual coupon is lower than the cut-off yield you will pay a cut-off price lower than face value.

Of course!

Let me try and explain with actual numbers using NY09100H as an example.

Successful bidders will pay 101.621 and will get a 3% coupon over 26 months. The actual yield is 2.70% and not 3% as the "premium" of 1.621 will be amortised over 26 months and the investor will only receive 100 on maturity.

The converse will also be true. If the actual coupon is lower than the cut-off yield the cut-off price will be lower than face value and the "discount" will be amortised over the duration of the bond to "top up" the yield to the cut-off yield.

 

[stephenbishop]

34500 - (101.621 * 300) = 4013.70

The cut-off price of 101.621 is the "dirty" cut-off price as it includes accrued interest of approx. 1.00 (122 days interest @ 3% pa). Your "clean" cut off price is therefore 101.621 - 1.00 = 100.621

 

[reddevil0728]

Are you able to shift stephenbishop SGS bonds post to this thread? His posts especially on Reopen is good info.

deleted my posts to push stephenbishop to 2nd...

maybe you can do so also. thanks!

 

[stephenbishop]

Picked some of my posts on SGS Bonds in the SGS tbills thread which may be helpful.

Are you able to shift stephenbishop SGS bonds post to this thread? His posts especially on Reopen is good info.

 

[chopra]

What is the difference between SGS and SSB?


The Singapore Savings Bonds (SSBs) are a special type of Singapore Government Securities (SGS), which also includes SGS bonds and treasury bills (T-bills). Unlike the SGS bonds and T-bills, SSBs provides investors the flexibility to withdraw their investments at any point and without any penalties.13 Aug 2020

 

[vsvs24]

Following article is about S-Reits but there is one para mentioning about comparison to Singapore Government bond.


At present, the Singapore 10-year government bond yield has surpassed 3%. We believe that the yield could go higher, and arrive at 4%. Coupled with the historical yield spread, investors should be expecting a yield of at least 7%. To get to such levels of yield, the share price of the S-REIT sector clearly has plenty of room to fall from today’s levels.

https://secure.fundsupermart.com/fs...think-again-a-hurricane-is-coming-for-s-reits

 

[sohguanh]

For ppl want to sell the SGS bond in market readers share below flow is viable
1. Transfer the SGS bond from CDP to FSMOne
2. Use FSMOne platform to do the sell (read confirm can sell no need wait if got buyer)

PS Note I never try above flow before so just sharing based on posts in the other T-bill thread

 

[churnmaster]

Following article is about S-Reits but there is one para mentioning about comparison to Singapore Government bond.


At present, the Singapore 10-year government bond yield has surpassed 3%. We believe that the yield could go higher, and arrive at 4%. Coupled with the historical yield spread, investors should be expecting a yield of at least 7%. To get to such levels of yield, the share price of the S-REIT sector clearly has plenty of room to fall from today’s levels.

https://secure.fundsupermart.com/fs...think-again-a-hurricane-is-coming-for-s-reits

Very good point raised by the analyst. As risk free rates start heading higher around the world, more and more assets will get repriced lower. Investors who look at historical returns and extrapolate the same into the future are going to be very disappointed.

 

[Listopad]

For ppl want to sell the SGS bond in market readers share below flow is viable
1. Transfer the SGS bond from CDP to FSMOne
2. Use FSMOne platform to do the sell (read confirm can sell no need wait if got buyer)

PS Note I never try above flow before so just sharing based on posts in the other T-bill thread

What do u mean by confirm can sell ?

 

[reddevil0728]

What do u mean by confirm can sell ?

you definitely can sell the SGS bond?

 

[sohguanh]

What do u mean by confirm can sell ?

What it means is if you place a sell order it wil be confirmed processed but I haven't verify this flow yet only read from other readers. If you have buy stocks before a sell order may not be confirmed sold for various reasons

 

[BBCWatcher]

Very good point raised by the analyst. As risk free rates start heading higher around the world, more and more assets will get repriced lower. Investors who look at historical returns and extrapolate the same into the future are going to be very disappointed.

I disagree, to some extent anyway.

First of all a government bond isn't a risk free asset, especially if it's a nominal government bond. There's inflation risk. Yes, I've written this point many times, but some people still don't seem to get the point. That's just the reality of how ordinary bonds work.

Second, it depends on the nature of the inflation. In particular if landlords are able to raise nominal rents in line with inflation (or even faster than that), and if their costs track at or below general inflation, then they do fine — and their share prices and distributions reflect all that. Somebody is collecting these higher prices after all. (Energy stocks are doing pretty well, aren't they? And bank stocks ordinarily do well in current or similar conditions.)

 

[reddevil0728]

What it means is if you place a sell order it wil be confirmed processed but I haven't verify this flow yet only read from other readers. If you have buy stocks before a sell order may not be confirmed sold for various reasons

can sell but depends on at what price?

 

[sohguanh]

can sell but depends on at what price?

As I said I have no life experience so only sharing what the other reader write in the other T-bill thread. For illiquid stock really zero buyers one you can check SGX for those stock they exist

 

[stephenbishop]

First of all a government bond isn't a risk free asset, especially if it's a nominal government bond. There's inflation risk.

Let's be precise here. SGS bonds and bills are AAA rated and have close to zero credit risk.

Short term SGS bonds and bills are also exposed to zero price/rate risk if held to maturity.

They are also exposed to exchange risk if one does not measure one's wealth in SGD. I believe most of the retail investors in these securities in this forum measure their wealth in SGD and are therefore not exposed to exchange risk.

It is not rocket science that they are exposed to inflation risk as are pretty much all asset classes. You beating this dead horse ad nauseum does not make it any more or less so.

 

[stephenbishop]

Second, it depends on the nature of the inflation. In particular if landlords are able to raise nominal rents in line with inflation (or even faster than that), and if their costs track at or below general inflation, then they do fine — and their share prices and distributions reflect all that. Somebody is collecting these higher prices after all.

You may be right if interest rates rise in a strong growth environment which is not what we have here. In a stagflationary environment it is a foolish landlord (and equally foolish commentators) who will believe that they have pricing power and can raise rents nominal rents faster than inflation. Good luck to both, they will need it!

 

[reddevil0728]

Let's be precise here. SGS bonds and bills are AAA rated and have close to zero credit risk.

Short term SGS bonds and bills are also exposed to zero price/rate risk if held to maturity.

They are also exposed to exchange risk if one does not measure one's wealth in SGD. I believe most of the retail investors in these securities in this forum measure their wealth in SGD and are therefore not exposed to exchange risk.

It is not rocket science that they are exposed to inflation risk as are pretty much all asset classes. You beating this dead horse ad nauseum does not make it any more or less so.

can establish something about BBCW pattern

1) talks about us person, non us person. and about tax efficiency
2) fx risk
3) nominal and not real, need to account for inflation.

one trick or 3 trick pony? agree with the beating this dead horse. maybe multiple horses?

good info but extremely condescending. "i know better than though attitutde"

 

[dappermen]

instead of derailing, could TS start to put down a summary chart/table on what is their ultimate diffce?

Sorry to say i m not sure what exactly happened to the "Actual content", is this thread created for bombardments ? Pls dont dirty a thread w TS's kind intention
alternatively why not bring it offline if members have endless qns that couldnt see eye to eye at all

https://blog.seedly.sg/singapore-government-securities-ssb-sgs-bond-treasury-bills/Seedly is the only gd site that provides value-adding financial summary and comparison, althoug not all appreciate Seedly

pls check as i didnt verify , not my fav topics:

	Singapore Savings Bonds (SSB)	SGS Bonds	Treasury Bills
What is it?	Safe and flexible bond option for investors	Tradable government debt securities	Short-term tradable government debt securities.
How it works?	Pays interest every 6 months.	Pays a fixed couple every 6 months.	Investors buy it at a discount. Upon maturity, investors will then receive the full face value of the bill.
Investment duration	10 years	2, 5, 10, 15, 20, 30 years	6 months or 1 year
Minimum investment	S$500	S$1,000	S$1,000
Maximum limit per investor	S$200,000	No Limit	No Limit
Fees	S$2	S$2 (Waived if you apply through DBS internet banking)	S$2 (Waived if you apply through DBS internet banking)
Payment of interest	Once every 6 months	Once every 6 months	No interest
How is the price and rate determined?	The interest rate is fixed and published by Monetary Authority of Singapore (MAS) every month. The interest rate is announced before the application.	Determined by auction	Determined by auction
How to apply?	Apply through DBS/POSB, OCBC and UOB ATMs or internet banking	Apply through DBS/POSB, OCBC and UOB ATMs or internet banking	Apply through DBS/POSB, OCBC and UOB ATMs or internet banking
How to redeem?	Redeem the full principal with accrued interest through Online Bank or ATM. There will be no penalty for early withdrawal.	Return depends on market conditions when traded in the exchange	Return depends on market conditions when traded in the exchange
Can we invest using our SRS account?	Investors can invest through their respective SRS Operator's internet banking portal.	Investors can invest through their respective SRS Operator's internet banking portal.	Investors can invest through their respective SRS Operator's internet banking portal.
Can we invest using our CPF?	No	CPFIS	CPFIS
Tax	There is no capital gains tax in Singapore

there is also no need to re-invent the wheel too (i believe there could be an old thread?), cos endedup certain threads will still endup disucssing similar bills/notes etc under the same roof again

the problem w forum might be too many threads, eg made to close after sometime ? and then re-create another, could be equally confusing too, Mods to take note of this suggestion too

 

[fr33d0m]

SSB duration is up to 10 years. can exit any month.