Bond Financing

With Bond Financing, you may use assets such as cash, shares, Exchange Traded Funds (ETFs), unit trusts, or bonds as collateral to purchase bonds with financing. This allows you to free up cash and optimize your portfolio to achieve your financial goals earlier.

How Does Bond Financing Work?

Using your existing portfolio as collateral, you may purchase bonds with financing to increase your portfolio yield without any additional cash outlay.

Existing 71% Loan to Value portfolio receiving 6% coupon p.a. S$250,000
Annual coupons received S$15,000
Available loan amount if purchase Grade A bonds S$625,000
Purchase 2 more bonds for S$500,000 @ 6% coupon p.a. on financing  
New total portfolio receiving 6% coupon p.a. S$750,000
Annual coupons received S$45,000
Less financing charges of 4.8% on $500,000 loan S$24,000
Net coupons received $21,000

By purchasing bonds with higher coupon rates than our bond financing rate, you will be able to profit from the difference in rates and increase your bond portfolio yield. This is called Positive Carry, which takes advantage of our low bond financing rates.

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