Institutional Investors

Frequently Asked Questions- Institutional Investors

MARKET STRUCTURE

General Information

1.Why Does The Singapore Government Issue Singapore Government Securities (SGS) Bonds/T-bills?
2. What Is The Credit Rating Of The Singapore Government? 
3. What Are The Benchmark Securities? How Often Are They Issued?
4. Are SGS Strippable?
5. Who Are The Primary Dealers (PDs) Of The SGS Market?

Auctions

6. How Are SGS Bonds and T-bills Issued?
7. Who Can Submit Bids At Auctions? 
8. Are New SGS Issues Announced In Advance?
9. How Are Auction Results Made Available To The Public?
10. How Can Investors Purchase SGS Bonds and T-bills At Auctions And In The Secondary Market?
11. What Are The Differences in Allotments Between Competitive and Non-Competitive Bids?

Trading 

12. How Are SGS Bonds and T-bills Traded In The Secondary Market? 
13. Are There Any Electronic Bond Trading Platforms For Trading Of SGS Bonds and T-bills In Singapore?

Settlement

14. How Are SGS Bond/T-bill Transactions Settled? 
15. Are There Any Provisions For Fails?
16. Where Are The SGS Kept?

LIQUIDITY

17. How Active Is Trading In The SGS Market? 
18. Are SGS Bond/T-bill Prices And Trading Volumes Available Daily?

FUNDING

19. Can Investors Obtain S$ Fund To Finance Their SGS Investments?

HEDGING

20. What Are The Available Avenues For Hedging Interest Rate Risks? 
21. Is An Established SGS Repo Market Available For Investors To Cover Their Short Positions?
22. How Can Foreign Investors Hedge Their Exchange Rate Risk Arising From Their SGS Investments?

LEGISLATION
 
23. Who Oversees The Development Of And Ensures Order In The SGS Market?
24. Is The PSA/ISMA General Master Repo Agreement Adopted In Singapore?

TAXATION

25. How Are Gains And Interest Income From SGS Taxed?

OTHERS

26. Can Non-Residents Buy SGS?

 

1. Why Does The Singapore Government Issue Singapore Government Securities (SGS) Bonds/T-bills?

Unlike many other countries, the Singapore Government does not need to finance its expenditures through the issuance of government bonds as it operates a balanced budget policy and often enjoys budget surpluses.

Singapore Government Securities (SGS) were initially issued to meet banks' needs for a risk-free asset in their liquid asset portfolios. Following efforts to enhance the efficiency and liquidity of the SGS market by MAS in 1998 as part of its strategy to develop Singapore as an international debt hub, the market has since grown significantly, making it one of the fastest developing bond markets in Asia. Currently, SGS bonds and T-bills are issued primarily to:

  • build a liquid SGS market to provide a robust government yield curve for the pricing of private debt securities;
  • foster the growth of an active secondary market, both for cash transactions and derivatives, to enable efficient risk management; and
  • encourage issuers and investors, both domestic and international, to participate in the Singapore bond market.

Singapore Savings Bonds are issued to individuals to provide them with a long-term savings instrument.

Proceeds from SGS issuance are instead paid into a Government Securities Fund, from which any interest and principal repayments on the SGS are withdrawn. A document summarising the details of the Singapore Government's borrowing portfolio and its unique nature can also be accessed here.

2. What Is The Credit Rating Of The Singapore Government?

The long-term local and foreign currency debt ratings of the Singapore Government accorded by the various international credit rating agencies are listed below: 

 

Moody's 

S&P 

FITCH 

R&I 

 Local Currency

 Aaa

 AAA

 AAA

 AAA 

 Foreign Currency

 Aaa

 AAA

 AAA

 AAA



3. What Are The Benchmark Securities? How Often Are They Issued?

Benchmark SGS bonds/T-bills are 1-year T-bills, and 2-, 5-, 10-, 15-, 20- and 30-year bonds. SGS bonds/T-bills are issued according to an issuance calendar published at the beginning of the calendar year. 

4. Are SGS Strippable?

Separate trading of principal and interests of SGS is currently not available. However, MAS has aligned the coupon payment dates (1st of the month every 6 months) of all SGS bond issues to facilitate the stripping of SGS in future. 

5. Who Are The Primary Dealers (PDs) Of The SGS Market?

The SGS Primary Dealers are appointed to act as specialist intermediaries in the SGS and S$ money markets. Primary Dealers are obliged to provide liquidity in the SGS market by quoting prices on all SGS issues under all market conditions. Click here for a list of the Primary Dealers and their contact information

6. How Are SGS Bonds and T-bills Issued?
SGS T-bills and bonds are issued to the market via auctions. 

Auctions typically take place 3 business days before the respective issuances. Prior notice is given on the SGS website generally one week in advance. 

All SGS bonds and T-bills are auctioned using a uniform price auction. Successful bids (whether competitive or non-competitive) will be allotted at the same uniform yield, which is the highest accepted yield (cut-off yield) of successful competitive bids submitted at the auction.  

Summary Table on SGS Bonds/T-bills Auction

 

T-bills

Bonds

Auction Format 

Uniform Pricing
(for competitive / non-competitive bidding)

Frequency

 

Depends on Issuance Calendar

Bid Format

In Yield Terms

Typical Issue Size

S$2 - 4 billion

S$2 – 3 billion for benchmark issues

Accounting

Book Entry

Eligibility

All entities and individuals, including non-residents

 Cut-Off Time

By noon on auction day

 

7. Who Can Submit Bids At Auctions?
Only PDs are allowed to submit bids at SGS bond/T-bill auctions. However, investors can also participate in SGS bond/T-bill auctions by submitting their bids through any one of the PDs by filling in application forms that are available from them. 

8. Are New SGS Issues Announced In Advance?
At the beginning of the year, MAS will publish on the SGS website an auction calendar specifying the dates on which SGS bond/T-bill auctions will be held. The calendar also includes the possible mini-auction dates for the year. Please click here for more information on SGS mini-auctions. The Singapore Savings Bonds issuance schedule is also announced annually, please click here to view the important cut-off dates for Singapore Savings Bonds issues.

9. How Are Auction Results Made Available To The Public?
Notices and results of bond auctions are published both on the SGS website and in the major newspapers. Results of past auctions can also be found in the Data section. 

10. How Can Investors Purchase SGS Bonds and T-bills At Auctions and In The Secondary Market?
To participate in the SGS market, an investor will first have to open a trading account with any of the participating banks (Primary or Secondary Dealers) in the SGS market (or in the case of an individual investor, an account with the Central Depository, CDP). As SGS are scripless, purchases and sales of SGS are reflected as book entries with the bank or the CDP respectively. To participate at primary auctions of SGS bonds or T-bills, an investor will need to submit bids through the PDs, or via Secondary Dealers who will then submit bids to the PDs, as only PDs are allowed to bid at SGS auctions. Individual investors do however have the additional option of submitting their bids directly via the ATMs of DBS, POSB, UOB and OCBC. In the case of SGS bonds, individual investors with a CDP account may also choose to trade SGS bonds in the secondary market through their stockbrokers on the Singapore Exchange (SGX) with effect from 8 July 2011. 

11. What Are The Differences In Allotments Between Competitive and Non-Competitive Bids?
In general, there are no limits to the number of competitive bids that can be submitted. The maximum allotments* will be accorded to PDs and non-PDs as follows:

 

Competitive Bids 

Non-Competitive Bids  

Primary Dealer

30%

1%

 Non-Primary Dealer

15%

S$2mil per bond application;
S$1mil per T-bill application 

Total non-competitive allotments are subject to a limit of 40% of issue on offer, with pro-rated application if application exceeds this limit.  

*Note – the maximum auction allocation limits under competitive bids for PDs and non-PDs include the amounts of non-competitive bids. 

12. How Are SGS Bonds and T-bills Traded In The Secondary Market?
SGS bonds and T-bills are traded over-the-counter between 9:00 to 16:30, with a break from 11:30 to 14:00. 

13. Are There Any Electronic Bond Trading Platforms Trading SGS Bonds and T-bills In Singapore?
Yes, there is currently an electronic bond trading platform available for use by PDs over the Bloomberg system. 

14. How Are SGS Bond and T-bill Transactions Settled?
SGS bond and T-bill transactions are settled T+1 on a delivery-versus-payment (DVP) basis. 

15. Are there any provisions for fails?
Yes, there are provisions for failed trades. These provisions can be found under Rules and Market Practices of the Singapore Government Securities Market. 

16. Where Are The SGS Kept?
As SGS are scripless, ownership of SGS is either reflected as a book entry in the investor's account with the bank, or the CDP for individual investors. Therefore, investors must open SGS accounts with any participating bank, either a Primary or Secondary Dealer of the SGS market, or the CDP, to facilitate the safekeeping and debiting/crediting of SGS. The banks maintain SGS book-entry accounts with MAS where their SGS holdings are custodised. 

17. How Active Is Trading In The SGS Market?
The volume of SGS bonds and T-bills traded has grown significantly over the years. From about S$816 million in 2000, the average daily trading volume had increased by nearly four-folds to S$3.29 billion in 2010.  

18. Are SGS Bond/T-bill Prices And Trading Volumes Available Daily?
Daily closing prices and monthly trading volumes are published in the Data section. 

19. Can Investors Obtain S$ Fund To Finance Their SGS Investments?
Financial institutions in Singapore are free to extend S$ loans to residents and non-residents for use in Singapore and investment in S$ financial markets. There are also no restrictions for both foreign and local investors to transact asset swaps. 

20. What Are The Available Avenues For Hedging Interest Rate Risks?
The Singapore interest rate swap, interest rate futures and bond futures markets provide avenues for investors to hedge their interest rate exposures. 

21. Is An Established SGS Repo Market Available For Investors To Cover Their Short Positions?
The SGS repo market is active, with average daily trading volume rising from S$543 million in 2000 to S$1.86 billion in 2010. Primary Dealers are committed to quote continuous 2-way prices for repos under all conditions. Singapore Savings Bonds cannot be pledged as repo securities.

22. How Can Foreign Investors Hedge Their Exchange Rate Risk Arising From Their SGS Investments?
S$ is a freely traded currency. Singapore has a developed foreign exchange market, which enables investors to hedge currency risks through S$ currency options, forwards, and other instruments. 

23. Who Oversees The Development Of And Ensures Order In The SGS Market?
The Monetary Authority of Singapore (MAS) issues SGS on behalf of the Singapore Government, and is responsible for the development of the SGS market. In addition, market players are expected to follow a certain set of rules and practices when trading SGS bonds and T-bills. These guidelines can be found under Rules and Market Practices of the Singapore Government Securities Market. 

24. Is The PSA/ISMA Global Master Repurchase Agreement Adopted In Singapore?
The key SGS market players have adopted this agreement as the standard legal documentation for the SGS repo market. All PDs have also executed the agreement with MAS. Other market players are highly encouraged to adopt the agreement in dealing with each other in SGS bond/T-bill repo transactions. 

25. How Are Gains And Interest Income From SGS Taxed?
There is no capital gains tax in Singapore. Interest income earned on qualifying debt securities, i.e. SGS issued between 27 Feb 1999 and 31 Dec 2018, by financial institutions and corporations are taxed at a concessionary rate of 10%. Interest income earned on other debt securities by financial institutions and corporations are withheld and taxed at the prevailing corporate tax rate. Non-residents, who do not have permanent establishments in Singapore, are automatically exempted from paying taxes on their interest income. Income earned by financial institutions in Singapore from trading SGS is taxed at a concessionary rate of 10%. 

26. Can Non-Residents Buy SGS?
There are no restrictions on non-residents purchasing SGS.