Singapore government bonds or Singapore Government Securities (SGS) bond pays a fixed rate of interest to the bond holder for every six months until maturity. At maturity, the bond holder will also collect the principal at par value.
This may provide investors with a safe investment alternative that can give both capital protection and steady returns.
Unlike other countries where the proceeds from the issue of bonds are used to finance government expenses, proceeds received are paid into a government securities fund instead. Any interest and principal repayments on the bonds are withdrawn from this fund.
In Singapore, SGS bonds are issued with maturities of 2, 5, 7, 10 and 15 and 20 years.
Source: Monetary Authority of Singapore
Source: Asian Development Bank
From 8th July 2011, you will be able to buy SGS bonds the same way you buy a listed stock with your
Initially, 19 bonds with maturities of between two to twenty years will be listed on the Singapore Exchange. Their coupon payment ranges from 1.125% to 4% per annum.
Both Singaporeans and foreign residents can invest in SGS bonds. There are also no restrictions to non-residents. The minimum investment is $1,000.
There is no capital gains tax in Singapore and individuals are exempted from interest income tax.
Institutions and corporations are taxed at a concessionary rate of 10% of the interest income.
However, taxation rules may change from time to time so you should visit the Inland Revenue Authority of Singapore for the lastest information.
Their 2 main differences lie in the length of tenor and interest payments.
SGS bonds have tenors of 2 years and above, up to a maximum of 20 years. T-bills have tenors of 1 year or less.
SGS bonds make periodic interest payments to the bond holder whereas for treasury bills, interest along with principal is paid off at maturity.Back to Singapore Bonds from Government Bonds