What Are Primary Market Bonds?
Purchase Period Type of Bonds Pricing and Flexibility What Are Secondary Market Bonds?
Purchase Period Type of Bonds Pricing and Flexibility Which One Is Right for You?
Primary Market Is Suitable for: Secondary Market Is Suitable for: Trust the digibank by DBS Application for Government Bond investments
Want to invest in Government Bonds but unsure whether to choose the primary or secondary market? Both offer the potential for returns and are relatively safe, as they are backed by the government.
However, there are key differences you need to understand to choose the option that best suits your needs and investment strategy.
This article will explain the differences between government bonds in the primary and secondary markets, helping you make the best decision based on your goals and financial priorities.
What Are Primary Market Bonds?
Primary Market Bonds are government-issued debt securities offered directly to investors for the first time through an Initial Public Offering (IPO) mechanism.
At this stage, you purchase bonds under pre-determined terms, including fixed pricing, tenor, and yield.
The funds raised go directly into the state treasury to finance public infrastructure and government programs.
Primary Market Bonds can only be purchased during a specific offer period set by the government—usually a few weeks long.
Once the offering period ends, the bonds are no longer available on the primary market and can only be bought through the secondary market.
The types of Bonds available in the primary market include:
Retail Government Bond (ORI) Savings Bond Retail (SBR) Retail Sukuk (SR) Savings Sukuk (ST) Each type has its own features, but all are offered exclusively through the primary market during their respective offering periods.
Some, such as SBR and ST, cannot be traded on the secondary market.
Primary Market Bonds are always sold at 100% of their face value (par value), meaning you buy them at a fixed price set by the government, with no markup or discount.
They can only be purchased during the offering period, usually starting from IDR 1 million and in its multiples.
The downside is that most of these bonds cannot be sold before maturity. However, exceptions include ORI and SR, which can be traded on the secondary market.
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What Are Secondary Market Bonds?
Secondary Market Bonds are government debt securities that are traded between investors after the initial public offering period has ended. In this market, transactions occur between investors—no longer between investors and the government.
Bonds in the secondary market can be purchased at any time while the bond market is open, not limited to a specific offering period. Transactions can take place on any business day, making it more flexible for investors who wish to enter or exit at any time.
The following types are available on the secondary market:
Retail Government Bond (ORI) Retail Sukuk (SR) Fixed Rate (FR) INDON/INDOIS (Foreign Currency Bonds) PBS (Project-Based Sukuk) Only tradable ones are available in the secondary market.
Bonds like SBR and ST are non-tradable, meaning they cannot be bought or sold on the secondary market. These can only be redeemed at maturity or via early redemption facilities if available.
Bond prices in the secondary market are highly dynamic. They may be higher or lower than the nominal value depending on market conditions, supply and demand, and economic factors such as interest rates.
Prices can fluctuate above or below par value (IDR 1 million per unit), influenced by market sentiment and the bond’s time to maturity.
This means investors in the secondary market have the potential to earn capital gains (profits from the difference between buying and selling prices), but also face the risk of capital loss.
For example, if you purchase a bond when prices have fallen due to rising interest rates, you may enjoy a higher yield. However, if you sell the bond while its price is still low, you may incur a loss.
Which One Is Right for You?
To determine which type of Government Bond suits you best, it’s important to first understand your risk profile. Below are some considerations to help guide your decision:
Primary Market Is Suitable for : First-time investors looking to purchase Bonds at a fixed (guaranteed) price. Investors who prefer to hold Bonds until maturity without being affected by market price fluctuations Those seeking fixed coupon payments and guaranteed principal repayment. Individuals who wish to directly support national development by participating in government financing. Sharia-compliant investors who avoid interest (riba) and prefer Retail Sukuk or Savings Sukuk. Secondary Market Is Suitable for: Investors who need flexibility to enter or exit their investments at any time. Those looking to take advantage of capital gain opportunities from bond price fluctuations. Investors who want to diversify their portfolio with various Bond series and tenors. Those seeking longer-term Bonds or Bonds denominated in foreign currencies. Short-term investors who plan to sell before maturity to access liquidity. The key is to understand your investment goals and risk appetite. If you prefer certainty and lower risk, the primary market may be the right choice.
However, if you’re open to higher risk in pursuit of potentially greater returns, the secondary market could offer more exciting opportunities.
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Primary Market Bonds are ideal for investors seeking certainty in returns and security through to maturity.
Meanwhile, Secondary Market Bonds offer flexibility in timing, the potential for capital gains, and the ability to buy or sell at any time—but with prices that fluctuate based on market conditions. Choose based on your needs, investment goals, and risk profile.
Once you're ready, you can rely on DBS Treasures Priority Banking as a trusted partner for investing in Government Bonds—with regular coupon payments and the potential for capital gain.
The offered coupons are competitive—higher than the average time deposit interest rate.Single Investor Identification ) with ease.
You'll also benefit from curated market insights delivered by our team of financial experts and tailored to your risk profile and portfolio needs—powered by Artificial Intelligence/Machine Learning (AI-ML).
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