I normally don't look at retail bonds due to its large initial investment, usually $5,000 and up, I would rather put the same amount in REITs to enjoy a potential higher yield. However this time round, CapitaMall is offering bonds at $2,000. I must admit it is a smart move to get smaller investors like myself to hop in on the bond wagon. Since I am new to retail bonds, I decided to create a FAQ. The answers are based on my research and understanding. Hence, if any reader pick up any mistakes or have further information to add, kindly point them out by leaving me a comment here or via my contact page. Where can I find the Offer Information Statement? OPERA - MAS What is a bond? A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) to use and/or to repay the principal at a later date, termed maturity.

Source: Wikipedia

If you want to read up more, Investopedia offers a very good article. What are the key dates?

Lodgment of the Offer Information Statement	3 January 2012
Opening date and time for applications for the Bonds under thePlacement	3 January 2012 at 2.00 p.m.
Opening date and time for applications for the Bonds under thePublic Offer	4 January 2012 at 9.00 a.m.
Last date and time for applications for the Bonds under thePlacement	9 January 2012 at 2.00 p.m.
Last date and time for applications for the Bonds under thePlacement	9 January 2012 at 2.00 p.m.
Balloting of applications for the Bonds under the Public Offer, ifnecessary (in the event of an oversubscription of the Bonds under the Public Offer). Commence returning or refunding application moneys to unsuccessful or partially successful applicants	11 January 2012
Expected Issue Date of the Bonds	12 January 2012
Expected date of commencement of trading of the Bonds on theMain Board of the SGX-ST	13 January 2012

What is the interest rate? Year 1 to 5: 3.8% p.a. Year 6 to 10: 4.5% p.a. (if bonds are not redeemed) This explains why the term Step-Up retail bonds are sometimes used. Is the interest cumulative? No. Can I sell before maturity date? Yes. The bonds are listed on the Main Board of the SGX-ST Should I subscribe to the bond? No right or wrong here. It will depend on your portfolio, risk appetite and cash flow. If cash flow is tight, the minimum sum of $2,000 is really appealing. The interest rate is nothing to wow about. Most of the past offerings offer a higher interest rate but a high minimum investment amount too. For more blog posts regarding this bond, please refer to the related posts below.

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I believe these questions that I ask myself would be similar to what most people will ask. If you have a question not found here, feel free to drop a comment here. I believe some season bond investors will be glad to help out. For myself, I will probably set aside $2K to $5K for it as I foresee a very stagnant market for the year ahead. Anything more than $5K, I would rather put it in higher yield preference shares or REITs. There’s still one question that I am still trying to figure out – what governs the price of bonds in the market? If the issue price is $1, why would anyone want to sell it below that price? Is it because the company is going bankrupt or because they need the money?