A resilient Singapore bond portfolio combines capital security, predictable income, and flexibility to adapt as macro conditions evolve. The building blocks are familiar: T-bills for near-term needs, SSBs for flexible, low-volatility savings, SGS bonds for core duration, and a selective sleeve of corporate bonds for excess yield.
Use a simple three-tier structure. Tier 1 is liquidity: 3–12 month T-bills and a ladder of SSBs meet emergency and near-term expenses. Tier 2 is stability: 2–10 year SGS provide reliable coupons and moderate interest rate sensitivity. Tier 3 is enhancement: high-quality corporates—banks, Temasek-linked entities, infrastructure—add 100–200 bps of spread over SGS, sized prudently.
Risk assessment underpins each tier. For interest rate risk, align portfolio duration with your time horizon; shorten when rate risk is asymmetric to the upside, extend when policy tightening is mature. For credit risk, focus on balance sheet strength, sector resilience, and covenant quality. For liquidity risk, favor larger, actively traded lines and avoid crowding into complicated perpetuals unless you understand resets and call incentives.
Evaluate returns holistically. Compare YTM to the sovereign curve at matching maturities; calculate yield-to-worst on callable structures; consider reinvestment risk for high coupons in falling-rate scenarios. Track bid-ask costs and expected holding period—turnover erodes income. Where possible, participate in MAS auctions for transparent pricing, and use limit orders on SGX.
Policy and macro signals guide adjustments. MAS’s exchange-rate-based framework means domestic yields still echo global rate moves. Watch inflation prints, labor market tightness, and auction coverage ratios. A steepening curve may justify a shift from T-bills into 5–10 year SGS; tightening credit conditions might argue for trimming lower-quality corporates and bolstering sovereign exposure.
Tax efficiency is a hidden edge. With no capital gains tax and interest on many government bonds exempt for individuals, Singapore’s sovereign income can compare favorably to similar credits elsewhere after tax. Keep documentation for your records and review prospectuses for any withholding considerations on foreign issuers listed in SGD.
Practical execution closes the loop. Build a bond ladder to smooth cash flows and reduce timing risk. Diversify across issuers and sectors to avoid single-name shocks. Maintain a liquidity buffer so you never have to sell into weakness. Periodically rebalance to lock in gains when spreads compress or to add when valuations are attractive.
By systematizing selection and sizing—and by letting the yield curve and credit spreads inform, not dictate, your choices—you can craft a Singapore bond allocation that earns steady income, withstands volatility, and remains ready for the next phase of the cycle.
