Bonds Singapore Market

Singapore Savings Bond (SSB) Oct 2023 – 3.16% Yield Finally Worth Considering Again

Calvin Lo

The latest SSB for October 2023 has a 10-year average yield of 3.16%, higher than September SSB offering 3.06%. The first year yield is 3.05%, and subsequently the yield remains relatively flat and only steps up from year 7 onwards. This month, there’s $800m of SSB on offer, more than the $600m offered last month. If you’re interested, remember to apply by 26 September, 9pm.

This month’s bond offering of 3.16% average 10-year yield is the 4th highest yield since the start of 2022 when I started tracking. The highest was 3.47% for Dec 2022 issue.

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.

Why apply for SSB?

In my opinion, the main features that make SSB attractive are:

  • Lock in yields for 10 years 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.
  • Safe, backed by Singapore government which has the highest AAA credit rating.
  • Easy to apply through local banks with only a $2 transaction fee per application.

Next month’s SSB projected yield

I’m writing this post a tad earlier than usual, so it’s difficult to estimate the projected yield for Nov SSB with only 4 working days worth of data in Sep so far. However, notably the 10 year SGS bond yields have been rising since the start of Sep.

My thoughts

Next FOMC will be on 20 Sep. The market is almost certainly predicting no rate hike this round. Thereafter though, the market expects the Fed raise rates at the subsequent meeting by 25 bps to 5.50-5.75%. For context, oil prices have been rising recently which might be stoking fears of inflation reigniting. The Fed has also been standing pat on its hawkish tone that they might not be done raising rates just yet.

Source: CME FedWatch Tool

Fixed deposit rates have somewhat stabilised and have not shown signs of moving back higher yet. T-bills cut-off yields however, have actually fallen the past few rounds, coming in at 3.7% the last auction on 31 Aug 2023. So, the gap between T-bill and SSB yields is narrowing.

Since this round’s yield is the 4th highest in recent times, I think it’s finally worth considering applying for some SSB. If you’re holding onto lower yielding ones, this round might be a good opportunity to replace some of those with higher yields, regardless of whether yields continue to go up or not.

Am I applying this round?

Currently, I’m holding 2 tranches of SSB with yields below 3.16%. One tranche is $9k of May 2023 issue at 3.07% and the other $19k of Apr 2023 issue at 3.15%. I don’t see a point in rolling over Apr 2023, since it’s only +0.01% but I think it’s worth considering for the May 2023 issue.

Unfortunately, I have a home renovation coming up in Oct 2023 which is estimated to cost around $40k, so I’ll be short on cash reserves for some time and won’t be able to deploy anymore cash into SSB in the near future until I can build the cash buffer back up. If yields move higher though, I will probably only roll my existing SSBs to higher yields.

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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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One thought on “Singapore Savings Bond (SSB) Oct 2023 – 3.16% Yield Finally Worth Considering Again”

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