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Published on March 28, 2008

Risk-free government bonds are now an attractive option for senior citizens who are 55 or older and looking for a safe-haven investment offering a coupon rate of 3.6 per cent per annum.

The Finance Ministry has launched a savings bond tailored to meet the demands of elders who might currently find it hard to decide where to put their savings.

Interest payments of the two-year savings bond will be made every six months. Bonds worth Bt12 billion will be distributed at nationwide branches of Bangkok Bank (BBL) and Bank of Ayudhya (BAY) from April 2 to 4 and April 8 to 11.

Public Debt Management Office director-general Pongpanu Svetarundra said the coupon rate is higher than the savings bond that the Finance Ministry issues every month with a three-year maturity and a coupon rate for the previous batch of 3.45 per cent.

 BBL managing director Singh Tangtatswas and BAY CEO Tan Kong Khoon believe that the bonds will be popular among senior citizens.

BBL executive vice president Ruchanee Nopmuang has assured that the elderly will get better returns from this bond than the bank deposit rate. She said the current bank deposit rate is about 2.25 per cent a year for three-month and six-month passbooks and about 2.38 per cent for a one year deposit rate.

Both bond subscribers and depositors have to pay 15 per cent tax on their value from their interest earnings.

She cannot predict what the trend in bank deposit rates will be over the next two years due to high volatility in the global financial market.

Investment in the equity market over the next two years may yield higher returns; but returns can also turn lower and some investors may lose their money.

If an investor can handle high risk in the stock market, he may choose investment in the equity market. But a government bond is the best option for the elderly who value a risk-free investment.

Finance Minister Surapong Suebwonglee said if the bond proves to be popular, the government may issue this type of bond again next year. Surapong signed a bond selling agreement with BBL and BAY yesterday.

Eligible buyers must be 55 years or older. The two banks will sell the bonds on a first come, first served basis on April 2-4. The elderly must show up at the bank to sign a document of agreement. Each has to buy at least Bt10,000 worth of bonds without a ceiling limit. If the bonds are not sold out after the first three days of sale, the two banks will sell them between April 8 to 11 to younger people, foundations and non-profit organisations.

Bondholders who hold bonds for at least six months can sell them in the secondary market if they do not want to wait until maturity.

Wichit Chaitrong

The Nation