Singapore Savings Bonds yield 3.26% first year – Must buy this month? What is the expected allotment for each investor? (July 2024 SSBs)

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In case you missed it – this month’s Singapore Savings Bonds are pretty attractive.

They yield 3.26% for the first 6 years.

Going up to 3.30% over 10 years.

Given that the best fixed deposit rates only yield 3.2% for 12 months.

Singapore Savings Bonds actually offer a better yield for any duration above 12 months, and can be redeemed any time with no capital loss.

Last month’s Singapore Savings Bonds only saw $24,000 allotment, so if you didn’t get enough allotment this is your chance.

   

Singapore Savings Bonds – Must buy this month? What is the expected allotment for each investor?

2 key questions I wanted to address in today’s article:

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

This month’s Singapore Savings Bonds yields are only slightly lower than last month’s

Just for the record, this was the interest rates on last month’s Singapore Savings Bonds:

And this are the interest rates for this month.

You can see how:

  1. Interest rates are exactly the same at 3.26% for the first 6 years
  2. Interest rates for 10 years is only slightly lower at 3.30% (vs 3.33%)

What is the projected interest rates on the August Singapore Savings Bonds? Will they be higher or lower?

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.

As we are now at the end of June, this means that we can sort of estimate the yields on the August 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 – so do take with a pinch of salt).

But it’s good enough.

Here’s the projection for the August Singapore Savings Bonds yields.

Oof – you can see how it projected to come in quite a bit lower across the board.

You’re looking at about 3.20% for the first 6 years.

The Singapore 10 year government bond yield backs this up.

You can see how interest rates in June have been generally lower than they were in April/May.

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

So it looks like the July Singapore Savings Bonds will have higher yields than the August Singapore Savings Bonds across the board.

That being said, the difference is not a huge one:

  1. 3.20% vs 3.26% for the first 6 years
  2. 3.34% vs 3.42% for the 10th year

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

They’re definitely very attractive and offer some of the best yields in the history of Singapore Savings Bonds.

And if you didn’t get full allotment last month this is really your next best short.

But I suppose if you really don’t have the cash, or if you want a large allotment, buying next month’s SSBs probably wouldn’t be the end of the world.

 

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

What kind of allotment we will see for the July Singapore Savings Bonds?.

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)
  3. June 2024 ($24,000 allotment)

And what were the yields for those 3 Singapore Savings Bonds?

The common thread for all those 3 Singapore Savings Bonds?

All of them had year 1 yields of 3.2% or higher.

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

The August Singapore Savings Bonds also has a first year yield of 3.2% or higher (3.26%) – which suggests demand will be high.

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%.

Tenure

Best fixed deposit interest rate (June 2024)

Bank

3 months

3.50%

Bank of China

6 months

3.35%

State Bank of India

12 months

3.20%

DBS/POSB Bank

 

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)

Makes sense.

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 $1.1 billion.

10% larger than the issue size in Nov / Dec 2023, and last month.

This is a good sign, as it suggests we may see a higher allotment per investor.

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

Let’s look at it this way.

The Dec 23 and June 24 Singapore Savings Bonds saw $20,000 and $24,000 allotment respectively.

Yields on the July SSB are slightly worse than Dec 23 and June 24.

Yet the issue size is 10% larger than both auctions.

Putting all this together, I’ll probably go with a rough allotment limit of between $25,000 – $40,000 for the July Singapore Savings Bonds.

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 (or redeem) Singapore Savings Bonds

In any case, if you’re keen to apply for the Singapore Savings Bonds.

The deadline is 9pm on Tuesday, 25 June 2024.

Same time for redemption of Singapore Savings Bonds.

Don’t forget that you can redeem and apply for SSBs in the same month if you at the $200,000 allotment ceiling, you just need to have sufficient cash on hand to do so.

 

This article was written on 21 June 2024 and will not be updated going forward.

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2 COMMENTS

  1. Hi FH, thanks for this informative article. Just to let u know of some typos. 1) the link for the “great website” is not showing the latest, 2) “20% vs 3.26%”, 3) “34% vs 3.42%”

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