More on the Singapore Savings Bonds, like I promised.
A Small Joke First
I have discussed with folks and we agree that the Singapore Savings Bonds are best described as a bond derivative of the 10Y SGS with a laddered payment structure that could potentially be a roller coaster.
Imagine what would happen if the SGS yield curve inverts, like it has done occasionally before ?
It means that the SSB would potentially have a STEP DOWN then STEP UP coupon payment schedule ! Imagine receiving 1% for Year 1 which becomes 0.9% for Year 2 and 0.8% for Year 3 then back up after (like a roller coaster) ?
More Comparisons and a Bigger and Better Table !
Will it make a difference ?
Annual Supply of SSB : $2-4 bio
Fixed Deposits of Non Bank Customers : $ 209 bio (this includes corporate deposits)
Savings Deposits of Non Bank Customers : $ 198 bio (this include corporate deposits)
Local Banks :
UOB : Total Cust Deposits $233 BIO
DBS : Total Cust Deposits $317 BIO
OCBC : Total Cust Deposits $ 246 BIO
*includes non SGD deposits
>> Conclusion : Will Not Make A Dent !
Retail Bonds
On to Retail Bonds – the other initiative discussed by the MAS back in March this year that we should expect after the SSB is launched.
They are not CPF eligible.
The CPF guidelines state that bonds cannot be offered to institutional or accredited investors.
Implication : I guess retail investors are advised to just manage their personal savings with retail bonds and SSB but not their CPF funds.
Yet it is ironic as I noted 2 years ago (and nothing has changed since) that retail investors are allowed to invest their CPF monies into CPFIS approved funds that hold junk bonds (eg O&G names) as long as they are issued by a Singapore-incorporated company and retail investors cannot use their CPF funds to buy retail bonds ?
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