Are this month’s Singapore Savings Bonds a must buy? What is the expected allocation for each investor?

As you guys would know, this month’s Singapore Savings Bonds are pretty attractive.

They yield 3.26% for the first 6 years.

Going up to 3.33% over 10 years.

These are some of the best yielding Singapore Savings Bonds in the history of SSBs.

To the point where I would expect very strong demand for Singapore Savings Bonds this month (I myself will be applying).

Questions received on Singapore Savings Bonds

I received this question from a reader:

“Just to tickle your mind and plain speculation sake, any wild guesses from you as to the allocation for this upcoming Jun 2024 SSB?”

Given I would be applying, I decided to look closer into the issue.

And address 2 key questions:

1. What is the projected interest rates on the July Singapore Savings Bonds – higher or lower?
2. What is the expected allotment per investor on the June Singapore Savings Bonds?

In other words – should you buy this round of SSBs or wait.

And if you were to apply, realistically how much SSBs are you going to get?

What is the projected interest rates on the July Singapore Savings Bonds? Higher or lower?

As you know, Singapore Savings Bonds track the average yield of the 10 year SGS for the previous month.

But it is smoothed out to ensure that the year 1 yield will never be higher than the year 10 yield.

Given that it is almost the end of the month, we can kind of estimate the yields on the July Singapore Savings Bonds.

I came across this great website that automatically computes this for you.

It’s not perfect (and the final yields do vary slightly from the projections).

But it’s good enough.

Here’s the estimate for the July Singapore Savings Bonds yields.

Projected to come in slightly lower than the June Singapore Savings Bonds.

Looking at the SGS 10 year yield sort of confirms this – as yields have been dropping since early May.

So… this month’s Singapore Savings Bonds are a must buy?

So it looks like the June Singapore Savings Bonds will have higher yields than the July Singapore Savings Bonds.

But as you can see the difference is not expected to be huge.

They’re definitely a good buy and some of the best SSBs in the history of SSBs.

But given next month’s yields are only slightly lower, I suppose you really don’t have the cash or want to spread out your purchases, you could probably wait for next month as well.

What is the expected allotment per investor on the June Singapore Savings Bonds?

The million dollar question though – is what kind of allotment we will see.

The same website I shared above has some nice charts on this.

For the past 12 Singapore Savings Bonds – we’ve seen full allotment for all of them, except:

1. Nov 2023 ($47,000 allotment)
2. Dec 2023 ($20,000 allotment)

And what were the yields for those 2 Singapore Savings Bonds?

Curiously – both had year 1 yields of 3.2% or higher.

So it seems like the magic number here for investors is 3.2% first year yield.

And it just so happens this particular Singapore Savings Bonds also has a first year yield of 3.2% or higher (3.26% in fact) – which suggests demand will be high.

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Why is 3.2% the magic number for Singapore Savings Bonds yield?

I suppose this makes sense as well.

In my latest Fixed Deposit article, we see that the best fixed deposit interest rate at 12 months is 3.20%.

This means that anything above 3.2%, and Singapore Savings Bonds offer a better yield than Fixed Deposit, with the added benefit of:

1. Being able to lock in yields for 10 years
2. Can redeem any time with accrued interest
3. Risk free (backed by Singapore government)

 So yeah… I kinda get it when you look at it this way.

Issuance amount of Singapore Savings Bonds at $1 billion is same as Nov and Dec 2023

The issuance amount of Singapore Savings Bonds this time around is $1 billion.

Coincidentally – exactly the same as Nov and Dec 2023.

Educated Guess – What is the expected allotment per investor on the June Singapore Savings Bonds?

Let’s look at it this way.

Issuance size is exactly the same as Nov 23 and Dec 23, which saw $47,000 and $20,000 allotment respectively.

Yields on the June SSB are slightly worse than Dec 23, but better than Nov 23.

Using these numbers would suggest a rough allotment limit of between $25,000 – $50,000.

So gun to my head, that’s probably the range I would go for.

But of course, this is just an educated guess, and you can see all the assumptions I have used above.

Feel free to come to a different conclusion from me! 😊

Deadline to apply for Singapore Savings Bonds?

If you’re keep to apply, please do so by 9pm on 28 May (Tuesday).

Same timing for the redemption of SSBs!

This article was written on 24 May 2024 and will not be updated going forward.

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