Latest Singapore Savings Bonds Allotment – Up to $173,000 per person! Why has interest for Singapore Savings Bonds plunged? (January 2023 SSBs)

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Latest Singapore Savings Bonds allotment results are out!

And I mean we all expected the demand for the latest Singapore Savings Bonds to be bad.

But wow… the demand was absolutely abysmal.

Allocation amount for Singapore Savings Bonds has soared – up to $173,000 per person!

 

Latest Singapore Savings Bonds Allotment – Up to $173,000 per person!

Diving into the numbers.

Out of a $900 million issue size, applications were received for $909.7 million.

That’s only 1.01x covered, which is terrible investor demand.

By contrast the previous Singapore Savings Bonds saw $1.7 billion worth of application.

This has led to a huge increase in allotment amount.

From $14,500 the previous round, to up to $173,000 this round.

Why has interest for Singapore Savings Bonds plunged?

It’s pretty clear why investor demand for the Singapore Savings Bonds has plunged.

The interest rates are low.

You’re looking at 2.95% interest rates for the first 3 years.

 In a climate where you can get 4.2% on Fixed Deposit:

And 4.28% on a risk free 6 month Singapore T-Bill

So yeah… I guess that’s where all the money has gone.

Good opportunity for those who want to refresh their Singapore Savings Bonds

As shared previously, I still like to keep some cash in Singapore Savings Bonds because they give me the option to (1) redeem any time and get the money back (the first business day of the next month), and (2) hold up to 10 years in case I am wrong on the interest rate outlook.

I did expect demand to drop for this round of Singapore Savings Bonds.

So I actually increased my application amount for the Singapore Savings Bonds quite drastically this time around.

While concurrently submitting a redemption request for most of my 2019 Singapore Savings Bonds.

The move looks to have paid off, because I have now successfully refreshed most of my older Singapore Savings Bonds at the most updated 2022 interest rates.

 

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Next Singapore Savings Bonds might be even worse

That being said, the next tranche of Singapore Savings Bonds might see even worse interest rates.

Singapore Savings Bonds track the average interest rates on Singapore Government Securities the previous month.

And SGS yields in the month of December have been terrible, with a 10 year yield of below 3% (2.95% latest closing).

You can see latest estimates for the next tranche of Singapore Savings Bonds below (estimates only), which give you a rough idea how bad they will be:

So investors who want to take the chance to redeem their old Singapore Savings Bonds and recycle into the new Singapore Savings Bonds, now’s your chance.

Although if all you care about is the short term yields, and don’t really need the liquidity, then you might be better off sticking with Fixed Deposit and T-Bills.

 

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