It was reported that Temasek Holdings will be issuing 10-year USD bonds to generate cash to fund it’s own business as well as it’s subsidiary companies.
The offer is expected to be at least US$500 million with the coupon rate yet unknown. For the previous 10-year bond issuance in 2005, the coupon rate was 4.5%. Temasek is looking to pay a spread of 1% over the equivalent US treasury bills, so the coupon rate could be close to 4%.
This brings us back to the commonly asked question: Should we be paid a higher interest for the monies in our CPF Ordinary Account?
Granted the bonds will be issued in USD, but could Temesek have issued bonds in SGD, and pay a coupon higher than 2.5% to the CPF board? Even the 10-year Singapore government bond is giving a yield of close to 2.85% currently.
A higher interest paid on our long term Ordinary Account funds (which are locked in) will go a long way towards helping people with their retirement funding.
100k earning 2.5% over 20 years will become 163k.
100k earning 3% over 20 years will become 180k.
100k earning 3.5% over 20 years will become 199k.
100k earning 4% over 20 years will become 219k.