SINGAPORE SAVINGS BOND...THE NET EFFECTS

The Monetary Authority of Singapore (MAS) has released more information on the Singapore Savings Bond (SSB). I will leave you to click on the link to find out more about the SSB.

But what's the effects of issuing such bonds?

1.  Another debt instrument is launched to borrow from the public. This time, aimed specifically at individuals, made easier to procure and with 'safeguards' to assure the retail investor.

2.  As suggested by the Business Times article, the SSB would give fixed depos a run for their money. I think it will also grab some share from the ordinary savings accounts, dividend yielding counters on SGX and perhaps even some ETFs. The example cited in the SSB link mentioned a range of 0.9 to 3.3% returns...averaging 2.4%. It should be close.

3.  Banks will likely react. Stocks may drop further to increase their yields and attractiveness.

4.  Will MAS raise rates sans the Feds? Maybe?

BORROWERS UPSET OVER HIKE IN MARGIN FOR SIBOR LOANS

The Straits Times' Money section had the following headline boldly emblazoned on page C5 this morning: 'Borrowers upset over hike in margin for Sibor loans'. 

The article goes on to explain that the anger was directed to the larger spreads and subsequent increase in payments to be borne by the borrower.

CASE felt that the increase in spreads should be clearly explained and justified by the banks in question.

Citibank seemed to have caved in slightly at the end of the article by making some concessions. I wonder if they were under any duress then.

But in any case, that's how banks make money from the retail borrower. Scalping you via the spreads. 

Perhaps it is time to refinance or reprice for some of those who took up loans in 2010 and 2011. 

The swinging good times of cheap credit is ending. Yellen reiterated that it would be sometime in 2015.