Thursday, September 23, 2010

Some things to note about the SIA Bond paying 2.15%

I was curious over the SIA Bond paying 2.15%, especially with all that news about it being meant for retail investors and that the bonds will be issued in denominations of $1,000. Well, that's not exactly true when I went to the ATM machine. Some things to take note:
  1. The bond is issued in denominations of $1,000 but the minimum application amount is $10,000.
  2. The bond is unsecured. Using an example, your mortgage loan is secured because if you're unable to pay, the creditor is able to seize the property to pay off the loan.
  3. The bond is unrated.

The bonds are also ranked similar to all and future unsecured loans. The current unsecured loan is $900million, due in December 2011. Interest paid for that loan? 4.15%.

Frankly, at a rate of 2.15%, I thought it was secured against some sort of securities. Apparently it is not. Good deal? Bad deal? You decide.

    1 comment:

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