SINGAPORE SAVINGS BOND NOT POPULAR?

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
Singapore Activist

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