Bonds Singapore Market

Why Is Demand For Singapore Savings Bond (SSB) So High?

Calvin Lo

Because Singaporeans just love to queue? First queue for HDB, then COE, now SSB.

If you’re like me and thinking about applying for SSB, you’d probably need to get in line. The past 2 months’ issuances (June and July) have been oversubscribed by at least 2 times, despite the increasing supply of SSB offered. Demand is rising probably due to higher interest rates offered.

SSB August 2022 rate

August SSB issue is now offering 3% average return over 10 years and starts at 2% in the first year. This is up from last month’s issuance which offered 2.71% average return over 10 years and started at 1.69% in the first year.

Source: MAS

There’s $700M worth of SSB up for grabs in August, up from $600M in July. However, last month attracted $1.32B worth of applications. In other words, if just those who didn’t get fully allotted last month try again this month (like myself), this month’s SSB will be oversubscribed again.

Source: MAS

Why is demand so hot

A few reasons I can think of why demand for SSB might be so high:

  • Rotation from stocks to bonds. With stocks dropping so much and in bear market, people might be selling stocks and buying bonds for safety instead. Where else safer than SSB or SGS when everything else is falling like dominos. Why not right, since SSB interest rates have also been increasing and expected to further rise with the Fed aggressively hiking rates.
  • Redeeming earlier issuances and applying for current ones. People holding onto previous issuances with 10y average return of 2% or less might be redeeming their SSB early (no penalty) and applying for this and upcoming issuances instead since interest rates are higher.

If you think of other possible reasons, please share.

I’m also queuing

I shared my reasons for applying for $40K worth of SSB last month, post here. I was only allowed $18K from July, so this month I’ll be applying for the balance $22K. If I can get $15K, I’ll be a happy camper already. Fingers crossed.

Anyway, US CPI for June just came in fresh off the press at 9.1% (above forecasts). So seems like the Fed will still be under pressure to continue on their path of aggressive rate hikes. Hence, SSB rates will probably continue going up in the short term.

Source: Bloomberg, 13 July 2022

Will you be applying for August SSB too?

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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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5 thoughts on “Why Is Demand For Singapore Savings Bond (SSB) So High?”

        1. Thanks. I need to apply again next month zzz. Demand so hot this round only can get $9k…

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