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SSB vs SGS bonds vs Treasury bills (T-bills)

Investment Products Backed By The Singapore Government: SSB vs SGS Bond vs Treasury Bills

profileMing Feng

Everything Also Can Link to Singapore Government

“How can dis b allow???”

Introducing The Straits Times Comment Section Facebook page, where they hunt for “gems” in the comment section of Straits Times to showcase Singapore’s finest.

The page consists of Keyword Warriors with the ability to package every piece of news into “PAP’s fault”.

Here are some of our favourite examples:

Source: Facebook | STcomments
Source: Facebook | STcomments

I give it to them. Some of these comments are really “WOKE”. Here’s a good one:

Source: Facebook | STcomments

 


AAA Credit Rating: Your Investments In The Singapore Government

Since we are already tying everything to our government, here’s a suggestion. Tie your investments with instruments, backed by the Singapore Government.

We typically jump at every opportunity to discredit our government, but for the longest time, one thing about Singapore’s Government withstood the test of time and the harsh comments of Keyboard Warriors.

Source: Facebook | SUTDmemes

Our Government ACED the credit rating like a boss from international credit agencies.

Rating AgencyLocal CurrencyForeign Currency
Moody'sAaaAaa
S&PAAAAAA
FitchAAAAAA
R&IAAAAAA

This means that Singapore Government Securities (SGS) is probably one of the safest possible investment instrument you can find in the world.

And if there is something Singaporeans like more than having a perfect score, it will be to make money.

Investing Singapore Government Securities is one way you can do so.


Singapore Savings Bond (SSB) vs Singapore Government Securities (SGS) Bond vs Treasury Bills

 Singapore Savings Bonds
(SSB)
Singapore Government Securities (SGS) BondsTreasury Bills (T-Bills)
What is it?Safe and flexible bond option for investorsTradable government debt securitiesShort-term tradable government debt securities
How does it work?Pays interest every 6 monthsPays a fixed couple every 6 monthsInvestors buy it at a discount. Upon maturity, investors will then receive the full face value of the bill
Investment duration10 years2, 5, 10, 15, 20, 30, 50 years6 months or 1 year
Minimum investment$500, and in multiples of $500$1,000, and in multiples of $1,000$1,000, and in multiples of $1,000
Maximum limit per investor$200,000Auction: up to allotment limit for auctions

Syndication: None
No Limit; up to the allotment limit for auctions
FeesCash: $2Cash: $2 (Waived if you apply through DBS internet banking)Cash: $2 (Waived if you apply through DBS internet banking)

CPFIS: $2.50 transaction fee, $2 quarterly service fee per counter
Type of Interest PaymentFixed coupon, steps up each yearFixed couponNo coupon; issued and traded at a discount to the face (par) value
Payment of interestEvery 6 months, starting from the month of issueEvery 6 months, starting from the month of issueAt maturity
How is the price and rate determined?The interest rate is fixed and published by Monetary Authority of Singapore (MAS) every month

The interest rate is announced before the application
Determined by auctionDetermined by auction
How to apply?Apply through DBS/POSB, OCBC and UOB ATMs or internet bankingApply through DBS/POSB, OCBC and UOB ATMs or internet bankingApply through DBS/POSB, OCBC and UOB ATMs or internet banking
How to redeem?Redeem the full principal with accrued interest through Online Bank or ATM

There will be no penalty for early withdrawal
No early redemptionNo early redemption
Can we buy/sell on secondary markets?NoAt DBS, OCBC or UOB main branches; on SGX through brokersAt DBS, OCBC or UOB main branches
Transferable?NoYesYes
Can we invest using our SRS account?Investors can invest through their respective SRS Operator's internet banking portalInvestors can invest through their respective SRS Operator's internet banking portalInvestors can invest through their respective SRS Operator's internet banking portal
Can we invest using our CPF/SRS?CPF: No
SRS: Yes
Auction: Yes
Syndication: No
Yes
TaxThere is no capital gains tax in Singapore

Most Singaporeans should be familiar with the Singapore Savings Bond (SSB).

The SSB is just one of the three types of Singapore Government Securities (SGS). There is also the SGS Bonds and Treasury Bills

These are all debt instruments backed by the Singapore Government and the good credit rating means that they are rather safe to invest in.

These instruments also allow you to buy and sell anytime in the market, indicating liquidity for your investment.


Singapore Savings Bond (SSB)

The Singapore Savings Bond will be a suitable investment for investors looking to invest their money for up to 10 years. With interest that increases over time, long term investors can look to invest their savings over a long period of time to maximise the returns on the interest rate.

The interest rate of each month’s SSB is correlated to the long term Singapore Government Securities (SGS) yields. It uses the 1,2,5 and 10-years SGS yield as a benchmark for the returns on SSB.

Some of the benefits of the SSB include:

  • No penalty for early withdrawal
  • A way to diversify your investment portfolio
  • Fixed, steady income until the bond matures.
  • It is a safe, long-term investment product

Investors can invest in the SSB through:

  • DBS/POSB, OCBC and UOB ATMs or internet banking
  • Respective SRS Operator’s internet banking portal using their SRS account.

Singapore Government Securities (SGS) Bond

The Singapore Government Securities (SGS) bonds are issued by the Singapore Government. With maturities ranging from 2, 5, 10, 15, 20 or 30 years, the SGS bond pays a fixed coupon rate of interest. The interest rate of the SGS bond is given out every 6 months.

Do note that the price of SGS bond fluctuates. For investors looking for the option of getting their invested capital back in any given month, the Singapore Savings Bond (SSB) will be a better option.

Some of the benefits of the SGS bond include:

  • A way to diversify your investment portfolio
  • Fixed, steady income until the bond matures.
  • It is a safe, long-term investment product

Investors can invest in the SGS bond through:

  • DBS/POSB, OCBC and UOB ATMs or internet banking
  • Respective SRS Operator’s internet banking portal using their SRS account.
  • Invest with your CPFIS fund

Treasury Bills (T-bills)

Treasury bills (T-bills) have a different value proposition from the SSB and SGS bond. Both the SSB and SGS bond appeal to the investors with the interest rate that they are providing.

The T-bills have no coupon but are offered to the investors at a discount to the face value. Upon maturity, the investors will then receive the full face value of the bill as returns on the investment.

Some of the benefits of the SGS T-bills include:

  • A way to diversify your investment portfolio
  • Fixed, steady income until the bond matures.
  • It is a safe, long-term investment product

Investors can invest in the SGS bond through:

  • DBS/POSB, OCBC and UOB ATMs or internet banking
  • Respective SRS Operator’s internet banking portal using their SRS account.
  • Invest with your CPFIS fund

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About Ming Feng
A stint in Bloomberg gifted me with a beer belly, which only grew larger when I moved on to become a Professional Trader. Now I turn caffeine into digestible finance-related content.
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