Singapore, Sep 1 (IANS): Singapore will issue its first savings bond in October, with long-term interest rates up to 2.63 percent per year, the Monetary Authority of Singapore (MAS) announced on Tuesday.

The 1.2 billion Singapore dollars worth of the savings bond will be available for application from September 1 to 25 while the bond will be issued on October 1, MAS said.

The interest rates of the bonds are calculated using the market-determined interest rates of Singapore Government Securities (SGS), Xinhua news agency reported.

As the yearly interest steps up over time, the average return also increases, the longer the savings bond is held.

The average return per year will range from 0.96 percent for one year to 2.63 percent at the end of the 10th year.

A new savings bond will be issued every month for at least the next five years, MAS said, adding that up to 4 billion Singapore dollars of savings bonds could be issued this year depending on demand.