Singapore’s bond market gives investors a toolkit for precision risk management. On one end are SSBs—capital-secure, redeemable monthly, and designed for retail savers. In the middle sit SGS bonds and short-dated T-bills, both sovereign but mark-to-market sensitive. On the other end are corporate bonds across investment-grade and high-yield tiers, offering spread pickup for shouldering credit and liquidity risk.
Start by defining the role bonds play in your portfolio. If stability and cash parking are priorities, T-bills provide competitive short-term yields with minimal duration risk, while SSBs add flexible access to funds without price volatility. For medium-term income, SGS bonds can anchor core fixed income, offering transparency and depth. Yield enhancement typically comes from well-researched corporates.
Understanding yield metrics is essential. Current yield (coupon divided by price) tells you income today, but YTM better captures total return to maturity. For callable bonds, yield-to-call may be more relevant, especially if rates fall and issuers refinance. Duration quantifies interest rate exposure; use it to size positions and to construct barbell (mix of short and long) or laddered portfolios that blunt timing risk.
Credit work separates signal from noise. Ratings provide a starting point, but bottom-up analysis should include business model quality, diversification of revenue, asset backing, and debt maturity schedules. Look for upcoming walls of refinancing, exposure to foreign currency liabilities, and covenant packages that protect bondholders. For Singapore corporates, examine property market cycles, bank funding conditions, and potential government links that can influence perceived support.
Liquidity can alter realized returns. Even if a bond’s fundamentals are sound, a wide bid-ask spread or shallow order book can erode gains on exit. Check SGX trading data, issue size, and dealer support. Smaller private placements or perps with complex terms may be hard to trade in stress. Build a margin of safety by sizing these positions modestly and holding a liquid reserve in sovereign paper.
Macro and policy context inform timing. MAS does not target a policy rate directly but guides monetary policy through the SGD NEER; however, domestic yields are still sensitive to global rate cycles. Watch inflation trends, US Treasury yields, and local auction demand metrics. A steep curve may reward extending maturities; an inverted curve argues for caution and shorter duration until the cycle turns.
Taxation is investor-friendly for individuals: capital gains are generally not taxed, and interest on many government issues is tax-exempt, improving net yields versus comparable markets. Use this to your advantage by prioritizing high-quality income within Singapore when appropriate.
A practical framework: park liquidity in T-bills and SSBs; use SGS as the duration spine; add select investment-grade corporates to lift portfolio yield by 100–250 basis points over the sovereign curve. Rebalance when rate expectations shift or credit spreads deviate from historical norms. This disciplined blend can produce steady income without venturing into undue risk.
