I am usually not interested in bonds except for Singapore Savings Bonds. However, a recent bond review by Adam Wong at the Fifth Person caught my attention. (Read more: Temasek retail bond: 5 things to know before you invest in the T2023-S$ bond)
Cutting the long story short, Temasek is offering a 5 year bond which matures in 2023 at a fixed interest rate of 2.7% per year. Interest is paid every 6 months and the principal amount is guaranteed by Temasek. The minimum investment amount is S$1,000 or more, in multiples of S$1,000. If you invest S$10,000, you will get S$270 per year or S$135 every 6 months.
The last date and time for applications under the Public Offer is 23rd October 2018 at 12 noon.
How To Apply
- You need a CDP account.
- There are three ways to apply for the T2023-S$ Temasek Bond.
- Apply via ATM (DBS, POSB, OCBC and UOB)
- Apply via Internet Banking
- Apply via DBS/POSB mobile banking application.
The bond is not totally risk free. Risks associated with bonds include default, interest rate, liquidity, inflation risks and other risks.
Temasek can fail to repay the principal amount when its bonds are due. Of course, the probability of this is extremely low.
Interest Rate Risk
Interest rates may rise, causing bond prices to fall. If you need to sell your bonds in such situations, you may suffer a loss. We need to be careful of this risk as the US Fed may continue to hike interest rates.
Who Is The Investment Suitable For?
The bond is suitable for you if you:
- want regular income at a fixed rate rather than capital growth;
- want priority in payouts over share dividends in an insolvency situation;
- are prepared to lose the principal investment if the Issuer and the Guarantor fail to repay the
amount due under the Notes; and
- are prepared to hold your investment until maturity or to exit the Notes only by sale in the secondary market which may be unprofitable or impossible.
Everyone is talking about this. The problem is the issue size is too small at $200M which can be absorbed by just a few UHNWI. In the last PE Bond issue, those who apply for >$ 1M and more only get $11K allocated. Probably curisng the way, waste my time dadada…. 🙂
For an average joe who has $60K to spare, won’t get anything more than $5K. So was wondering its worth the effort and the subscription fee?