SINGAPORE: The second issue of the Singapore Savings Bonds has closed, with only about 20 per cent allocated to investors. This is lower than the one-third allocation rate in the first issue.
Excluding applications that exceeded allotment limits of S$50,000 per bond issue or up to S$100,000 worth of total bonds, the Monetary Authority of Singapore (MAS) said S$257 million worth of bonds will be allocated. This is compared to the S$413 million in applications for the first tranche, also capped at S$1.2 billion. Both issues were capped at S$1.2 billion each.
Investors can apply for the Singapore Savings Bond through an ATM. However, an individual Central Depository, or CDP account is needed too, alongside an ATM card and a bank account. Financial advisors said the target group for the Singapore Savings Bond is less likely to have a CDP account.
A CDP account, commonly known as a trading account, can be opened in person at the Central Depository, or via mail. According to financial advisors, the target group for the bonds are retail investors, who are looking for a safe, long-term savings option.
These can be investors that are more risk-averse, or those with simply less spare cash to set aside for retirement planning.
SingCapital CEO Alfred Chia, said: "Based on our ground feel, many people are still unaware about the Singapore Savings Bond or have the CDP account, which is why I think there should be a lot more awareness.
“A lot of people probably are still not familiar with this. But those who are following all this news, who are more savvy, probably they are expecting the yield to be higher."
This group of investors - betting on global interest rates to go up - are most likely to have redeemed their bonds.
Data released by the MAS on Wednesday showed that bondholders applied to redeem S$9.3 million worth of bonds. This will be effected on Nov 2. The Savings Bonds will be issued every month for at least the next five years.
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