Martin Lee @ Sg
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Applying for Singapore Savings Bonds

Yesterday, MAS released more details on the Singapore Savings Bonds that I wrote about earlier.

To apply, you will need two things:

  1. A bank account with either DBS/POSB, UOB and OCBC.
  2. An individual Central Depository (CDP) Securities account with direct crediting service (DCS) setup.

Direct Crediting Service (DCS) allows you to credit your Singapore-dollar dividend payments or other cash distributions directly into your designated bank account. If you have been receiving your dividends in the form of cheques, that will mean you are not on the DCS yet.

Application can be done via ATM or internet banking. Bank charges may apply.

Application and Redemption Periods

A new Singapore Savings Bond will be issued monthly.  Applications for each Savings Bond issue will open on the first business day of each month and close four business days before the end of the month.  Redemption requests can be made during the same period.

All application and redemption requests will be processed three business days before month’s end.  Savings Bonds will be issued on the first business day of the next month and redemption proceeds will be processed by the second business day.

Quota

Individuals will be able to apply for each Savings Bond issue with as little as $500, and up to $50,000.  Applications and redemption requests must be made in multiples of $500, In addition, individuals will be able to hold up to $100,000 of Savings Bonds at any point in time.

It’s good that MAS has decided to set quite a high limit.

Allocation

In case of over-subscription, MAS will allocate the lowest amount ($500) to everyone. If there is surplus left, the next $500 will be allocated to everyone, and so on.

Here is one worked example:

Singapore Savings Bonds Allocation

 

The Government plans to issue up to $10,000 of Savings Bonds.

Four individuals A ($2,000), B ($4,000) C ($5,500) and D ($6,500) applied for a total of $18,000 of Savings Bonds.

The available bonds will be spread out among as many investors as possible in the following manner:

  • Applications are filled in denominations of $500 upwards.
  • After Round 4, $8,000 of Savings Bonds have been allotted, and A’s application has been fully met. $2,000 of Savings Bonds are left.
  • In Round 5, $1,500 of Savings Bonds are allotted.
  • The remaining $500 is insufficient to fill all applications in Round 6. One person among B, C and D is randomly allotted the remaining $500. In this case, C gets the $500. A is allotted $2,000, B and D receive $2,500 each, and C gets $3,000.

For more details, you can refer to the Singapore Savings Bond factsheet.

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2 comments
vsl says 4 years ago

The govt should mandate a maximum service charge that banks can impose on investors when applying for or redeeming SSBs. $2 is a reasonable amount. It is similar to charges paid by investors when applying for IPOs.

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xyz says 4 years ago

From the MAS details & Jos Teo’s regurgitation in Parliament, looks like SSBs will drive a nail into banks’ FDs coffins.
As for the $100K limit, people with more cash than that tend to put into MMFs, short-tenor bonds, treasuries, which have greater flexibility & same or higher yields than FDs.
The only thing left is how attractive the SSB yields, and whether banks will take revenge via high charges.

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