Only 3.4% of Singapore Savings Bond subscribed?

November 27, 2015

Only 3.4% of Singapore Savings Bond subscribed?

I refer to the article “Demand for Singapore Savings Bond falls sharply in 3rd issue” (Channel News Asia, Nov 26).

It states that “for the December issue, total application within individual allotment limits amounted to S$40.99 million, well below the maximum allotment of S$1.2 billion.

The application amount was down sharply from S$257 million for the previous month’s issue and S$413 million for the first tranche.”

This means that only 3.4 per cent ($40.99) of the $1.2 billion was taken up.

Return for 10 years – 2.44%

As to “for the December issue, the bond will pay investors an average interest rate of 2.44 per cent if it is held for the full 10 years.

In the second tranche, investors could earn an average interest rate of 2.78 per cent over a 10-year tenure, while the first issue would pay an average interest rate of 2.63 per cent” – the current issue’s average return per year range from only 1.15 per cent (year 1) to 2.44 per cent (year 10).

In contrast, the CPF Ordinary Account interest rate is 2.5 per cent.

10 years’ inflation 30%?

Inflation for the last 10 years was 30 per cent (CPI 2004 76.903, 2014 99.984).

Why do you think the subscription rate is so low?

Leong Sze Hian

SHARE TWEET PIN SHARE

About the Author

Leong
Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.