How does ListCo Bonds work?
ListCo Bonds are short-term bonds issued by SGX's publicly-listed companies. An investor provides a certain amount of cash in the beginning, and will receive yearly payments along with a stated interest.
· Let’s say a company is looking to raise SGD $500,000.
· It is issuing a ListCo Bond with a 5% interest rate.
· You decide to invest $5,000, which is 1% of the amount to be raised.
· In the first year, you will receive $2,500 (50% of principal amount) along with $250 (5% interest).
· In the second year, you will receive the remaining $2,500 (50% of principal amount) along with $250 (5% interest).
Why invest in ListCo Bonds?
- Enjoy attractive returns on investment (as high as 9% return per annum);
- Mitigated risks through the provision of meaningful collateral – ListCo bonds are backed by the entrepreneur’s shares in the ListCo*.