Martin Lee @ Sg
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First Ever Singapore Government 30-yr Bonds

Yesterday, the Singapore government sold S$2.1 billion of its first ever 30-year Singapore Government Securities (SGS) bonds. Previously, the longest-dated bond sold was only of 20-year maturity.

The bond had a coupon rate of 2.75% per year and were trading at a yield of around 2.84% per annum on the secondary market after they were issued.

Subsequently, retail investors will be able to buy them on the SGX secondary market (provided there are sellers).

Looks like people consider Singapore government bonds to be safe than US treasuries as the yield on a 30-year US Treasury bond is currently about 3.3%.

Thirty years is a long time and frankly, I do not think a yield of 2.8% p.a. offers good value for money.

The idea of a 30-year bond was first suggested by Minister Tharman Shanmugaratnam back in 2007.

He said then that it would be ideal to peg the interest rate of the Special, Medisave and Retirement Account (SMRA) in CPF to a 30-year Singapore government bond rate. Since then, the SMRA rate had been pegged to the yield of a SGS 10-year bond plus 1%.

If the government really decides to use the 30-year SGS as a benchmark for our SMRA interest in the future, the days of 4% p.a. could very well be over.

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2 comments
Nuts says 7 years ago

As I suspected, PAP will hold off on implementing the reduction of SMRA interest rate.

After more than 2 years that the CPF Special account & Retirement account etc was supposed to be reduced to roughly 2.7% (SGS10Y + 1%), PAP is still giving a floor of 4%.

Once they get over 65% votes in a GE, then they will implement the reduction of CPF interest rate. Then even fewer people will be able to meet the ever-increasing Minimum Sum in cash by 55-yrs old.

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Jasmin says 7 years ago

Though I know nuts about finance, I still know 2.8%pa for THIRTY years is surely not a good deal for me.

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