SGS bidding via ATMs
Singapore Govt Securities (SGS) are offered to retail investors via ATM bidding from today.
Previously, retail investors access Singapore Govt issued debt via money market funds as well as primary and/or secondary dealers. Now, the retail investor can choose to apply for SGS (new issuance) via ATM bidding through the ATM network of our 3 local banks namely DBS, UOB and OCBC.
SGS T-bills or bonds are almost risk-free investments as they are backed by the ‘AAA-rated’ credit of the Singapore Government. The expected return of such safe fixed income instruments is naturally not the most attractive amongst all asset classes. T-bills are sold at discount where the investor is repaid with par value at maturity of the bill. For longer dated bonds, coupons are paid out usually on half-yearly basis and par value of the bond is redeemed at maturity.
Bond prices are a function of interest rates, credit quality, bond duration and demand/supply constraints. Investors should pay attention to the yield to maturity of the debt security, and not just focus on the coupon rate of the bond. It is important to note that bond prices move inversely to the direction of interest rates i.e. when interest rate go lower, bond price increase as investor pay more to receive the higher yield from prior issuance. Also, the price of longer duration bonds is more affected by interest rate fluctuations.
