2 Singapore Savings Bonds are backed by the Singapore Government, with features that make them accessible and suitable to individual investors:
i. Principal guaranteed: Investors will always get their investment amount back in full. In other words, they will not suffer any capital losses.3 A factsheet summarising the features of the Savings Bonds is available in the Annex.
ii. Term of ten years: This allows individuals to save for the long term and receive higher long-term interest rates (which comprise what investors call “term-premium”).
iii. Step-up interest: Investors will earn interest that is linked to long-term Singapore Government Securities (SGS) rates. Unlike SGS that pay the same coupon each year, Savings Bonds will pay coupons that “step-up” or increase over time. As a result, the average interest rate is higher the longer the Savings Bonds are held.
iv. Monthly issuance: This makes Savings Bonds accessible on a regular basis.
v. Flexible redemption: Bond-holders can choose to get their money back in any given month, with no penalty. This means that individual investors do not have to decide upfront how long they wish to invest.
vi. Small minimum investment amount: A minimum of $500, and in subsequent multiples of $500 up to a limit to be announced later. A limit will help to maximise participation and to ensure a broad reach.
vii. Only individuals can apply for and hold Savings Bonds.
4 MAS expects to launch the Savings Bonds programme in the second half of 2015. MAS will provide information on how to apply for Savings Bonds closer to the launch date.
more information at http://www.mas.gov.sg/news-and-publications/media-releases/2015/singapore-savings-bonds-for-individual-investors.aspx