Singapore government bonds will begin trading on the Singapore Exchange (SGXL.SI) by the middle of this year, providing retail investors with a safe but higher-yielding alternative to bank deposits, Finance Minister Tharman Shanmugaratnam said on Monday.

He said retail investors concerned about the low savings rates can also participate in government bond auctions or buy high-quality corporate bonds that are now traded in smaller lot sizes on the exchange.

 

Singapore’s annual inflation hit 3.8% in November, the highest since January 2009, and analysts said the rate could accelerate further in the first few months of 2011, prompting the central bank to maintain or further tighten policy.

 

In contrast, Singapore banks currently pay less than 0.2% per annum on savings deposits.