About Reopened Bonds
When a bond is reopened, MAS issues more of an existing bond partway through its tenor. This increases the total amount outstanding of that bond.
Only SGS bonds can be reopened, but not CMTBs, T-bills or Singapore Savings Bonds.
A reopened bond has the same maturity date and coupon rate as the existing bond. However, there are some important differences that you should take note of.
Remaining Term to Maturity
A reopened bond will have a different issue date from the existing bond, although the maturity date remains the same. The remaining term to maturity of the reopened bond will thus be different from the original tenor of the bond.
Example
N500100X was first issued on 1 February 2000 as the 5-year benchmark bond, and matured on 1 February 2005. On 1 November 2002, N500100X was reopened as the 2-year benchmark bond.
| Original issuance | Reopened bond | |
|---|---|---|
| Issue date | 1 February 2000 | 1 November 2002 |
| Maturity date | 1 February 2005 | 1 February 2005 |
Yield and Bid
When you bid for a reopened bond, you should enter the effective return that you expect from investing in the bond, or the bond's yield to maturity. Yield to maturity shows the expected total return if a bond or bill is held to maturity. For a bond with coupons, it also assumes that the coupon received are reinvested at the same rate.
In contrast, the coupon rate is fixed, and the coupon is calculated based on the coupon rate and the face value of the bond. For a reopened bond, you will receive the original coupon rate.
Price
While reopened bonds have the same maturity date and coupon rate as the original bond, the price of a reopened bond depends on the cut-off yield at the auction. This is influenced by the market price of the existing bond in the secondary market. The cut-off price could be higher or lower than the original face (par) value of the bond.
| If the cut-off yield (effective rate of return) is | Cut-off price is |
|---|---|
| Higher than the coupon rate | Lower than the face value |
| Equal to the coupon rate | Equal to the face value |
| Lower than the coupon rate | Higher than the face value |
Bid Amount Deducted Upon Application
The price of the bond will only be known after the auction. For individual investors, 115% of the amount you bid for will be deducted from your account upon application.
After the auction, any excess will be refunded to your account, and any shortfall will be deducted.
Find out more about reopened SGS bonds (87.4 KB).