In a recent Straits Times article “Huge demand for corporate bonds this year“, the author highlighted “Corporate bonds may be rather unexciting to some, but they are selling like hot cakes so far this year – and this month is shaping up as the busiest yet.”
On 25 Apr 2012 Press Release, the Housing and Development Board (“HDB”) has issued Notes under its S$12 billion Multicurrency Medium Term Note (“MTN”) Program.
The issuance comprises two series of Notes:
- S$360 million 5-year Fixed Rate Notes (the “Notes”) with a coupon of 1.165% per annum payable semi-annually in arrear. The Notes were issued on 24 April 2012 and will mature on 24 April 2017.
- S$800 million 10-year Fixed Rate Notes (the “Notes”) with a coupon of 2.185% per annum payable semi-annually in arrear. The Notes were issued on 25 April 2012 and will mature on 25 April 2022.
Given the creditability of HDB, the coupon rate is rather pathetic. This kind of offer is more suitable for institutions than retails for different reasons.
I have been consistently receiving queries from clients for “higher interest products”. Recently Hong Leong Finance is promoting a 3 year fixed deposit with mere 1.7% interest rate but attracted much attention.
What is interesting is that in the same day newspaper, the headline news was “Inflation hits 5.2% in March“. I always wonder how do people cope with inflation by putting money into fixed deposits.