Congrats, it seems my RM is useless. Anyway Monday I will just park my money in FD. FSM one you got too? You really going all in... haha.

A newbie wanna explore SG market...
a Malaysian can buy SG Bond ?

Yes, you have a few options - I can elaborate on the options of buying through a banker (as that's what I do), I don't have any bonds through DIY options like FSM so I can't comment on those, nor do I have any participation in bond funds.

You'll need to open a bank account in Singapore and demonstrate that you are an ACCREDITED INVESTOR.

The criteria (for DBS anyway, but it's quite uniform amongst the banks in Singapore) to be an accredited investor are as below:

Minimum income of S$300,000 in the last 12 months (or its equivalent in a foreign currency); or

Net personal assets exceeding S$2 million, of which the net value of your primary place of residence can only contribute up to S$1 million; or

Net financial assets exceeding S$1 million (or its equivalent in a foreign currency); or

Hold a joint account with an Accredited Investor, in respect of dealings through that joint account.

Once you've successfully opened a bank account, you'll need to be assigned a relationship manager. For DBS, unless you're with private banking, you'll be assigned a RM that takes care of a group of investors. In my case, I have a personal private banker so the bond options I get are usually not available to those that are taken care of by the common pool RM. These are usually IPO bonds of good companies.

For UOB, you're assigned a personal RM even if you're just a UOB Privilege (AUM $250,000 or $300,000) or Privilege Reserve (AUM $1,500,000) account holder, but I followed my Privilege Reserve RM over when he got promoted to private banking (AUM $3,000,000 and above) - and it's the same case: if you're UOB Privilege, you won't get access to certain bonds, and certainly not the IPO bonds of good companies. For that, you'll need to be at least Privilege Reserve or Private Banking.

Finally, Maybank (these are the 3 banks that I bank privately, so I can comment a bit). I was assigned an RM when I was merely Maybank Privilege, and initially, just like with UOB or DBS, I was only ever offered bonds on the secondary market. However, as my portfolio grew and my AUM expanded with Maybank, my status was upgraded to Private Banking and the IPO offerings came fast and furious.

I believe it should be quite the same with all the other banks in Singapore: they'll reserve the juicy ones for their "best" clients.

Moving on, to the bonds themselves: private banks offer the option of buying bonds at IPO price, and usually offer a rebate of between 0.25 to 0.5 basis points as an incentive, so I've bought a few IPO bonds at par prices. However, they will charge an account keeping fee (can be quite hefty if not waived - and waiver depends on AUM value), and take a commission out of every coupon payable (not a lot). There are also ancillary charges pertaining to keeping the bonds in trust for you and lodging them with the CDP.

Finally, the cost of entry of a bond in Singapore is like that of Malaysia's: you'll need SGD250,000 minimum to buy a bond. I believe Malaysia requires at least RM250,000 as well.

Some Australian bonds (bought through the Singapore banks) allowed entry as low as AUD200,000 in the past, but because the AUD has trended downward, it's now also AUD250,000 per bond per purchase.

Hope that helps.

I fail the first criteria 😁

Moving on. What's the typical returns for these types of bonds?

Hi Gashout, my bonds average between 4 to 6% coupons, but that’s somewhat a little on the conservative side as I pick only investment grade and mainly Singapore based bonds.

The conditions are of "or" logic/statements... you just need to satisfy one of them. So the easiest is maybe is the condition 3 (1 sgd million).

Not necessary to have Singapore bank account. If you have a Malaysia private bank/wealth management account, they could also offer SGD bonds.

You also need to be accredited in Malaysia, but Malaysian accredited is lower threshold as its in MYR eg RM3 million.

But for small fry like me minimum ticket size (SGD250k) is a problem. Thats a huge chunk to be exposed to one name.



This post has been edited by Cubalagi: Aug 6 2023, 11:23 PM

Depends on the rating n issue currency and timing.

Oh ya, I totally forgot that private banking in Malaysia would also allow you the same access. My bad. Thank you for clarifying that for the readers!

The right choice. Once you reach q certain level, preservation of fund even at slow growth is good.

So it's either or. Got it. Thanks.

Yes. I forgot about the rating part. Thanks for reminding.

The better the rating, the lower the yield. It’s a fact of finance life haha.

Earlier this year, some of the lower rated USD AT1 bonds of European banks were being offered at more than 10% yield.

Yeah, if I were a betting man, I would have gone in ... most of the AT1 suffered a sell down after the Credit Suisse debacle, but almost all of the bigger names recovered. Could have taken the profit from the capital recovery, but because of my bond buying approach is to buy & hold till maturity, I didn't bite.

Sounds very tempting. But bonds is always safer with high rating.

I have never touched bonds cause I have zero clue about it. If I got my first bond, I will update here

Do take note, coupons from bonds paid in Australia &/or NZ are also not tax-exempt. So, if something pays 5%, after taxes, it'll be closer to 3.5% compared to an equivalent 6% bond in Singapore.

Yup, which makes Sg bonds much more attractive. Needless to say the currency factor as well.

Good choice.

As a financial centre, Singapore has a much wider repertoire of products and a much more agreeable tax environment for the utilisation of such products than a country like Australia or New Zealand.

Stability of currency aside, it’s also helped by a certain political predictability that investors find attractive, not to mention a high ranking in terms of good governance and lack of corruption (although low corruption is not the same as no corruption - but the system is in place to weed out the perpetrators aggressively).

Hong Kong was its biggest rival but since COVID and the uprising, as well as the prevailing anti-China sentiment and narrative, Hong Kong has sadly lost a lot of its former lustre.

Ah well, Hong King’s loss is Singapore’s gain and who am I to complain.

Since we have good sharing on bond, what your thought and opinion on this.

MY GOVT BOND
Issued 2017 and matured 2037.
It’s being resold by the bank from original owner. Coupon is 4.7% but yield to maturity is 4.01%
Indicative ask price is MYR107.83
Payout semi annual
Sukok code MX170003
Min 100k.

The bank now have left only 400k
Stable under RAM Outlook rating

This post has been edited by gamenoob: Aug 8 2023, 05:16 PM

This reads like it's a sovereign bond. Honestly, these are bonds that you can hold on to, unless you have absolutely no faith in Malaysia - the only thing you worry about is if the country defaults. The yield won't be the most attractive, but it's as safe as it gets.

Please feel free to correct if I'm mistaken.

It is basically MGS-I or Islamic bond from Malaysia Govt as it should yields around 4% with A+ rating from RAM itself

The worry is not the default 🤦‍♀️ but the RM depreciation upon maturity and lower coupons payment even though as RM will depreciated more and inflation will eat in through the coupons money making it less value upon maturity

USDMYR uptrend since 1998 will tells you a better picture