Bonds Singapore Market

Singapore Savings Bonds (SSB) Dec 2022 Allotment – Losing Its Lustre?

Calvin Lo

Wow! Everyone gets up to $14k allotment for Dec SSB despite the yield hitting record highs. Imagine my surprise that demand has cooled quite a bit, although still oversubscribed by 1.7x. I was expecting less than $10k allotment because of the record high yield.

Source: MAS

However, I guess “high yield” is relative to other SGS bonds, most prominently T-bills and maybe even bank fixed deposits which have been shooting up even faster. The last 6-month T-bill on 24 Nov had slightly lower cut-off yield of 3.9%, but is still considerably higher than SSB.

Similarly, FD rates have been climbing fast and have been hard to keep track. Luckily, we have the wonderful folks at Seedly to help us follow the best FD rates (Nov 2022). Seems that OCBC and Citi are offering FD rates up to 3.90%.

Next month’s SSB for Jan 2023 issuance will likely yield much lower. See my previous post for context. Basically, the reason is 10Y SGS bond yields have been falling off a cliff since US CPI numbers came in cooler than expected.

Source: Trading Economics

Based on the average daily yield of 10Y SGS so far in Nov 2022 with only 2 trading days left, Jan SSB should yield ~3.25%. If so, I’ll probably redeem more of my older, lower-yielding SSBs from July/Sep/Oct (yield <3%) and apply for newer tranches.

See my SSB tracker page where I compile SSB info monthly from MAS website.

I think it’s still a toss up on whether demand for SSB will decline further, since T-bill yields are also declining. That said, the yield gap is still pretty substantial. I’m still sticking to SSB because of the flexibility (early redemption w/o penalty), and due to my personal opinion that recession is coming (indicated by inverted U.S. Treasury yield curve). I’m not particularly keen on T-bills and FDs due to the short tenures and/or large minimum amounts required.

I’ve also put most of my cash into respective brokers’ (moomoo, Tiger) and robo-advisors’ (Syfe, Endowus) cash management solutions to earn higher yields on cash while waiting for opportunities to enter the market.

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