Bonds Singapore Market

Singapore Savings Bonds (SSB) Jan 2023 Allotment – Demand Unwinding

Calvin Lo

Based on allotment results for SSB Jan 2023, demand for SSBs are unwinding. This round, SSB was only oversubscribed by a hair (around 1% oversubscribed only). Most people got fully allotted, except the few that applied for more than $172.5k. I got my $14k allotted. Yay, I guess?

Source: MAS

Since next month’s SSB for Feb 2023 issuance will likely be below 3% (~2.97% with only 1 more day to go in Dec) and much lower than prevailing T-bills, fixed deposit, and even bank savings rates (roughly 4+%), I think demand for SSB will drop off further. Applied amounts might fall below the offered amount again, which will be the first since May 2022 SSB.

The advantage is that you might have more certainty in being allotted the amount of SSB you want. SSB can still be worth considering if you think rates might fall below 3% within the next 5-10 years.

If you’re looking at SSB because you want something liquid (can redeem SSB early without penalty), actually bank savings accounts or cash funds might be a better alternative now since yields are higher.

The yield gap between SSB and other low-risk options though has grown recently especially for the short-term rates, which might explain why SSB are no longer as attractive.

I’ve also redeemed $18k from prior SSB issuances yielding below 3%. With SSB yields falling though, I’ll probably redeploy these funds to bank savings account, cash funds, or fixed deposit. However, if short term interest rates reverse to the downside sooner than expected, SSB might start to look interesting to me again.

I’ve already redeployed $10k to CIMB fixed deposit at 4.15% yield (preferred banking can get 4.20%).

Source: CIMB

As it stands, I’ll make my last SSB redemption of $10k of Sep 2022 SSB which is yielding 2.80% only. Thereafter, I’ll be back to steady state of $50k SSB ($40k emergency funds + $10k parents funds).

See my SSB tracker page which SSB stats compiled from MAS website.

Since we’re still in a bear market and risks of recession are growing, I plan to just continue focusing on optimising yields on idle cash through SSB and/or other cash management solutions, besides the regular DCA into ETFs through FSMOne and Syfe.

Read also: How I Manage My Cash Between SSB, T-Bills, Fixed Deposits and Cash Funds

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