Bonds Singapore Market

Singapore Savings Bond (SSB) June 2023 – SSB Hunting Season is Over!

Calvin Lo

The latest SSB for June 2023 has been announced with a 10-year average yield of 2.81%, a pretty big drop from last month’s SSB offering 3.07%. The first year yield is also 2.81%, and subsequently the yield stays more or less flat every year until maturity. If you’re interested, remember to apply by 26 May, 9pm.

This month’s bond offering has fallen below 3% and has a flat yield curve until maturity. SSB was designed to have step up interest rates, i.e. you’re supposed to get higher yield for every year you hold the bond until maturity. However, recently shorter-term yields have been spiking up and longer-term yields have been falling, resulting in an inverted yield curve.

If you’re looking for places to park your cash or SRS funds for the long term but still want the option to terminate early without penalty, SSB could be a good option. Unfortunately, SSB is not eligible for CPFIS scheme so you can’t invest your CPF savings into it.

For more details, refer to my Singapore Savings Bond (SSB) tracker.

Alternatives in Fixed Income

Although one of the safest (backed by Singapore government), SSB is definitely not the highest yielding fixed income instrument in the market. High yield savings accounts, cash funds, fixed deposits and even Treasury bills are yielding higher.

See table below from info I’ve gathered from various sources on fixed income yields (not exhaustive). Also check out my Fixed Income Tracker page for the latest version.

Why SSB might still be worth applying for

In my opinion, the main attraction of SSB is the long tenure while having the flexibility to redeem early without penalty. You’d also still be entitled to accrued interest upon redemption. So if interest rates continue to rise, you have the option of redeeming earlier bonds and applying for the latest issuance with higher interest rates.

In contrast, if you’re mostly in T-bills or fixed deposits which usually have short tenures and interest rates start to reverse back downwards, you might not be able to find similar high yields when your T-bill or fixed deposit matures.

My thoughts

Tonight’s FOMC might deliver what most think will be the last 25 bps rate hike this cycle, unless things change drastically of course. Fixed deposit rates have already been falling, and likewise for T-bills and SSB.

I think SSB below 3% is no longer attractive, unless other short-term fixed income options continue to fall precipitously as well. At the moment though, my preference would still like with short-term cash funds or bonds for the bulk of my cash.

That said, I always advocate having a mix of longer term SSB and shorter term FD, T-bills, cash funds, or even high-yield savings accounts for emergency funds or the cash portion of our portfolio.

Am I applying this round?

My allocations to SSB have been fully optimised, i.e. I have all I want and all above 3.07% yield. Currently, I’m sitting on $40k SSB which are my emergency funds. The rest of my spare cash is mostly with MoneyOwl WiseSaver (yielding 3.90% last I checked) while waiting for other opportunities.

I won’t be applying for this round of SSB. SSB hunting season might well be over, at least until the next Fed hiking cycle.

Will you be applying for this month’s SSB?

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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

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