How should one go about in buying SGS treasury bills or bonds ? For this post, I will cover on how one can buy SGS treasury bills and bonds through banks in the primary market.
There are two avenues which you can purchase SGS treasury bills and bonds. You can either buy it on the primary market or the secondary market. The primary market is where the sale of the SGS treasury bills and bonds is made by the Singapore Government to the SGS primary dealers through auctions while the secondary market is the trading of the SGS treasury bills in a market after the SGS treasury bills and bonds have been sold by the government.
I have attached a list of the SGS primary dealers below and if you wish to buy it on the primary market, you can approach the banks in the list.
Before you approach any of the banks to purchase SGS treasury bills and bonds, you will have to decide on which treasury bill or bond that you wish to purchase and the date of issue for the SGS treasury bill or bond that you are interested in. Currently, 3-months treasury bills are being issued weekly while the 1-year treasury bill, 2-year, 5-year, 7-year, 10-year and 15-year are being issued according to the issuance calendar. To access the issuance calendar, click here for the 1-year treasury bills and bonds and here for the 3-month treasury bills. Alternatively, you can click here to access the main page of the SGS website and on its main page, there will be updates on the latest issue of treasury bills and bonds under the 'latest highlights'.
After you have decided on which SGS treasury bills or bonds to buy, take note of the issue or ISIN code and the issue date. Do remember that you must submit your application 3 days before the issue date of the SGS treasury bill or bond that you wish to purchase. The minimum sum of investment is $1,000 and you must be at least 21 years old.
Once this is done, you can approach the banks under the SGS primary dealers list. When you enter into the bank, you can approach any of the staff saying you wish to purchase SGS treasury bills or bonds. After that, you will need to fill in two forms. One form is for opening a SGS trading account with the bank and the other form is to buy the treasury bill or bond that you wish to bid for since SGS treasury billls and bonds are being sold in the form of an auction. You can either opt for the competitive bid i.e. choose the price which you wish to make the purchase or the non-competitive bid which will guarantee you a successful purchase of the treasury bill or bond. My recommendation is that you choose the non-competitive bid since the difference in yield between the competitive bid and the non-competitive bid is rather small and on top of that, you run a risk of being unsuccessful in you application. If your application is successful, funds will be deducted from your designated account on the issue date. Subsequently, if you wish to purchase SGS treasury bills and bonds, all you have to do is to fill up the bidding form and submit it again.
I have read in some forums that there were some difficulties in purchasing SGS treasury bills and bonds from banks due to the fact that some of the staff are not well-trained in this investment product. This can be due to the fact that banks do not earn anything from processing your application since there is no commission involved. In fact, banks have no incentives to recommend SGS treasury bills and bonds since they can might as well use the money you placed in fixed deposits to buy SGS treasury bills and bonds and profit from the difference in interest as the interest in SGS treasury bills and bonds is higher than fixed deposits. Thus if you face any difficultes in making your purchase, you can either request to see a more senior staff or simply go to the other branches of the bank.
In my next post, I will cover on how to buy SGS treasury bills and bonds in the secondary market.
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visit my blog too? and ex links?
ReplyDeleteKay,
ReplyDeleteI always enjoy reading your articles. Nobody does it better than you in explaining the intricacies of safe financial investments. Keep 'em coming.
After I have opened a SGS Trading a/c with a bank, is there a way of purchasing T-bills or bonds via internet? Which bank(s) offer online purchase/sale facilities? As you have mentioned, there is a disincentive for banks to process such transactions for investors.
Can one purchase/sell such products directly online from MAS? Tks.
Hi,
ReplyDeleteI am only looking forward to exchange links between sites which are blogging on the same content as my site. Thanks.
Kay
Hi VS Lingam,
ReplyDeleteThanks for your compliment. So far, I don't think there are any ways of purchasing SGS online in the primary market. If you wish to buy on the primary market, you will have to make a trip personally down to the bank to make a purchase unfortunately.
However, there is a way of purchasing SGS online via the secondary market. You can do so through fundsupermart or POEMS, which is an online trading platform offered by the brokerage although both ways are subjected to a small commission. I will be discussing on how can one buy SGS on the secondary market in my subsequent posts.
Kay
Kay,
ReplyDeleteTks for explanation. Will wait for your subsequent article.
Hi Kay,
ReplyDeleteCurrently i already have these accounts (CDP, DBS and UOB saving account). I do not have POEMS or Fundsupermart account.
I have several queries on the buy/sell of SGS Bonds.
1) This is first time i intend to apply for SGS bonds through the primary market and understand that application/bids could be submitted through the local bank ATMs. Do i still need to apply a SGS trading account before submitting the bids/application through ATMs?
2)Assuming that the auction are over and bonds are already issued and assuming that i have some SGS bonds in the CDP account. Could i sell or buy more bonds through the ATMs? or trading could only be done through secondary dealers (ie. have to go down to bank branches)?
Regards
Hi James,
ReplyDelete1) If you are applying through the ATMs, you will need to have a valid CDP account. Since you already have one, I don't think it's an issue.
2) If you are buying more bonds, you can still apply through the ATMs. As for the selling of bonds, you can either approach the banks directly. I'm not that sure but perhaps you can sell it through the online platform of fundsupermart or POEMS. You may have to call them to check this out.
Kay
Hi Kay,
ReplyDeleteI have one query regarding the purchase of reopened bond issues through the primary market which i hope you can advise.
For reopened bond issues, i understand that the coupon rates are already fixed/known beforehand. What's unknown and to be determined at the auction is the yield and price of the bond.
Let's say at the auction, the determined bond price is $105 and i have to pay $105 for a bond (presumbly higher than the $100 face value of the bond??). Say if i hold this bond to maturity, will i get back a principal of $105 or just the face value of $100?
Thanks & regards
when they say coupon payment,does it mean we will receive cash every 6mths on the SGS bonds?
ReplyDeleteI went to Standard Chartered bank to open an SGS account. Firstly he had no idea what I was talking about, and had to check the internet. Secondly he told me ONLY DBS offers this.
ReplyDeleteHi , i was checking out the SGS website on the upcoming Bonds issuance. i notice that it does not provide the coupon yield. can you advise how i can check the coupon yield to decide which bond to buy ?
ReplyDelete