By MoneyBees
Work out an SGS bond's price from its yield or its yield from the price, the accrued interest you pay on top, and every coupon to maturity, with the latest MAS auction results.
Singapore Government Securities bonds are issued by the Singapore Government. They pay a fixed coupon every 6 months and return the face value at maturity. Tenors run from 2 to 50 years.
Apply at an MAS auction through DBS/POSB, OCBC or UOB, by ATM, internet banking or app, with cash, SRS or CPFIS funds. For cash you also need a CDP account with Direct Crediting Service. You can also buy existing bonds on SGX through a broker or at the three banks' main branches.
S$1,000, and in multiples of S$1,000. For a new bond the full bid amount is taken from your account when you apply. For a reopened bond 115% of the bid is held, and the difference is refunded or debited after the auction.
Every 6 months, on the first business day of the month, starting from the month of issue. Bonds bought with SRS or CPFIS funds pay into that account. SGS bonds trade ex-coupon 3 working days before the coupon date.
The clean price leaves out accrued interest, the interest built up since the last coupon date. The dirty price is the clean price plus accrued interest, and it is what a buyer pays. Prices on SGX include accrued interest; MAS's daily closing prices are clean.
When market yields are above the coupon, the price falls below S$100 so the buyer still earns the market yield. When yields are below the coupon, the price rises above S$100. Held to maturity, you get S$100 back either way.
There is no early redemption. You can sell on SGX or to DBS, OCBC or UOB at the market price, which may be higher or lower than what you paid.
You can, through CPFIS. MAS notes that CPF interest rates may be higher than the yield on SGS, so compare the bond's yield with what your CPF account already earns.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).