Thursday, March 29, 2012

Govt sells maiden 30-year bonds

SINGAPORE: The Singapore government has sold a maiden S$2.1 billion of 30-year bonds.

The auction on Wednesday drew total bids of more than S$4.75 billion.

According to analysts, the bond sale received a lot of support from life-insurance investors.

The idea of a 30-year bond was first rooted in 2007 by then-second minister for finance, and now Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam.

He said then, that it would be ideal to peg the Special, Medisave and Retirement Account (SMRA) rate in the national pension, to a 30-year rate.

At the moment, the SMRA rate is pegged to the 10-year bond, with an additional spread of one per cent.

BNP Paribas senior currency strategist Thio Chin Loo said: "The bid to cover ratio is quite a lot at 2.26, which is higher than the average SGS auction of below two.

"So, I think it goes to show that demand is strong and the reason demand is strong, is it does build the yield curve into a longer tenor and because there is a flood of Singapore-dollar liquidity looking for a place to park."

The longest-dated bonds previously sold by the Singapore government had a 20-year maturity.

View the original article here

Source From Channel News Asia

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