Bond investment is always in voracious demand in Singapore. With many years of low deposit rate and lifeless Singapore stock market, people are struggling to find a better investment to place their hard earned savings.
Probably because majority of the retail bonds are sold by the banks, many Singaporeans treat bonds just like fixed deposits – You put money with the bank, reap the coupons, and take your principle back when it is matured.
This created an interesting phenomenon that people lining up to buy bonds from whichever company that promises a higher coupon.
- $160m limited tranche bond issue with annual “interest” of 7.125% in 2013
- $100m limited tranche bond issue with annual “interest” of 5.55% in 2014
Do these offers sound attractive to you? They certainly were to our fellow Singaporeans:
- The first bond offer received $240m order
- The second bond offer received over $500 million offer
But these investors are going to have a hard time to get their money back because these bonds were issued by Swiber Holdings, who has just made an application to wind up the company.
If you are someone who is interested in investing in bonds, here are the 3 lessons you must learn from this event.