Bonds Singapore Market

My Singapore Savings Bond (SSB) Yield Optimisation Strategy

Calvin Lo

With so many compelling options to park cash right now yielding around 4%, holding onto previous SSB tranches yielding below 3% comes at an opportunity cost. Even this month’s SSB Jan 2023 at 3.26% 10-year average yield might not seem attractive. On the flip side, I feel that I can afford to be more aggressive in my SSB yield optimisation strategy by rolling over previous yields, with more alternatives now in case I can’t get fully allotted.

I still want to hold some SSB since they are of longer tenure than T-bills and fixed deposits, just in case yields reverse and start declining again. I’m not a fan of longer duration SGS bonds since they are relatively illiquid. IMO, holding some SSB can hedge against the risk of longer term yields falling fast, especially if we fall into recession in 2023.

Read also my post on How I Manage My Cash Between SSB, T-Bills, Fixed Deposits and Cash Funds.

SGS yield curve is hinting at falling longer term yields despite a spike in short term yields, causing a huge yield curve inversion (usually a harbinger of recession). Most on Wall Street are calling for recession as base case, and probably already pricing it in.

Source: World Government Bonds

Recent 10Y SGS bond yields so far this month have continued to decline and currently sits at 2.9%. With only a week left in Dec, next month’s Feb 2023 issue will almost definitely be in the 2.9-3.0% yield range, much lower that of Jan 2023 issue.

Source: World Government Bonds

If you want to lock in the higher yield of 3.26% for Jan SSB for the next 10 years, make sure you apply by 27th Dec 2022, 9pm.

Source: MAS

With that background, here’s my SSB optimisation strategy. I plan to apply for $14K this month for Jan SSB and simultaneously redeem $18K of my July and Oct SSB tranches. I think $14K allotment is a reasonable target this month, in line with last month’s allotment amount. If all goes well and I get fully allotted, I’ll return the $4K I’ve borrowed from investment funds for rolling over SSB. With this redemption, the only SSB tranche I’ll be left with yielding below 3% is $13K of Sep SSB.

I’ve also compiled some stats and charts from MAS website on my SSB tracker.

For any excess funds not allotted plus the $18K redeemed from previous SSB tranches, I’m looking to dump them into cash funds which are yielding around 4%, and re-evaluate my options again next month. Cash fund options I’m considering include MoneyOwl WiseSaver, Tiger Vault, moomoo Cash Plus, Webull Wealth.

Read my post Don’t Miss Out On Yield On Your Idle Cash

What’s your allocation mix of cash and bonds looking like?

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