Should you buy the 10 year SGS bond? Here’s why we prefer the SSB.



By Beansprout • 20 Jan 2023 • 0 min read

The SSB has a higher 10 year average interest rate compared to the 10 year SGS bond currently, offers capital protection and more flexibility.

10 year SGS bond Singapore

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What happened?

Apart from the upcoming 1-year T-bill auction, some in the Beansprout community also asked about the 10 year SGS bond (NX22100W) which will be auctioned on 27 Jan 2023. 

After all, it is not often that we see a government bond of such longer maturity available to individual investors. 

So let’s take a look at whether the 10 year SGS bond might be worth your time to subscribe to while visiting family and friends during the Chinese New Year period!


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Source: MAS


#1 – How does the SGS bond compare to the T-bill?

First and foremost, let’s go through the difference between the SGS bond and the T-bill.

If you are familiar with Singapore Treasury Bills (T-bills), then it would not be difficult to understand what SGS bonds are. 

They are fully backed by the government and offer you a sound way to diversify your investment portfolio.

The key difference is in the time period that it will take for the bonds to mature. 

SGS bonds have a maturity of 2 to 50 years, which means that the government will repay the amount that you have put into the bond after a longer period of time compared to the T-bill. 

You will also receive regular interest payments when holding on to the SGS bond. This is different from the T-bill, which are issued to you at a discount. 

 SGS bonds T-bills 
Available tenor2, 5, 10, 15, 20, 30 or 50 years6 months or 1 year
Type of interest rate paymentFixed couponNo coupon; issued and traded at a discount to the face (par) value
How often interest is paidEvery 6 months, starting from the month of issueAt maturity

#2 - How does the 10 year SGS bond compare to the Singapore Savings Bond?

The key difference between the SGS bond and the Singapore Savings Bonds (SSBs) is that SSBs offer you the flexibility of redeeming in any month. 

SGS bonds can be traded in the secondary market, including on the SGX. However, the price you would get may be above or below what you paid if they are sold before maturity.

SGS bonds offer a fixed interest rate, while SSBs offer interest rates that increase the longer you hold.

For CPF funds, you can buy the SGS bond using your CPF OA, but you can buy the SSB using your CPF SRS account. 

SGS bonds have a minimum investment amount of S$1,000, while SSBs have a minimum investment amount of S$500.

 SGS bond Singapore Savings Bonds
Available tenor2, 5, 10, 15, 20, 30 or 50 yearsUp to 10 years
Minimum investment amountS$1,000, and in multiples of S$1,000S$500, and in multiples of S$500
Maximum investment amountNone; up to the allotment limit for auctionsS$200,000 overall
Buy using SRS and CPF funds?YesSRS: Yes; CPF: No
Type of interest rate paymentFixed couponFixed coupon, steps up each year
How often interest is paidEvery 6 months, starting from the month of issueEvery 6 months, starting from the month of issue
Secondary market tradingAt DBS, OCBC or UOB main branches; on SGX through brokersNo
Maturity and redemptionNo early redemption. Investors receive the face (par) value at maturity (i.e. price of S$100).Can be redeemed in any month, with no penalty. Investors receive the face (par) value plus accrued interest upon redemption.

#3 – What are the risks of the 10 year SGS bond?

While the SGS bonds are fully backed by the Singapore Government and are generally seen to be safe investments, they are not risk free. 

From comparing the difference between the SGS bond to the SSB, we can see some of risks of holding on to the 10 year SGS bond. 

SGS bonds are subject to interest rate risks. This means that when interest rates go up, the price of the bond may come down. Hence, you might suffer capital losses if you were to sell the bond before its maturity date. 

Looking at the 10 year SGS bond NX22100W which was initially issued August 2022 as an example, its last traded price on the SGX was at 94.23. This is lower than the price when the bond was initially issued last year. 

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Source: SGX


The other key risk is liquidity risk. While you are able to buy and sell the SGS bond on the SGX, they are not as liquid compared to a blue chip stock like DBS.  

Looking at the trading volume of the same 10 year SGS bond (NX22100W), there are limited trades on the SGX on most days. 

This means that you may not be able to sell the bonds at your desired price if you need your money back urgently.  

#4 -  What interest rate would I be able to get on the 10 year SGS bond?

If you have been looking at the Singapore Savings Bonds (SSBs), you would have noticed that the interest rates have been falling. 

This is because we have seen a decline in interest rates in recent months. 

The yield on the 10 year Singapore government bond has fallen to about 2.8% from a peak of above 3.6% back in October. 

Chart, line chart

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Source: Tradingview

What would Beansprout do?

For cash applications, the Singapore Savings Bonds (SSB) look more attractive to us compared to the 10 year SGS bond. 

The latest SSBs offer an average 10-year interest rate of 2.97% per annum. This means that you can lock-in interest rates that are higher than the current yield on the 10-year SGS bond. 

With the SSB, you would also get the additional benefits of being able to get your investment amount back in full with no capital loss, and redeem your investment in any given month without any penalty. 

If interest rates were to move higher again, we can always redeem our SSB and apply to the new issuance at a higher interest rate. 

A screenshot of a computer

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Source: MAS


How about for CPF funds? The current 10 year government bond yield of 2.8% is slightly higher than what we would get in our CPF OA account. 

For a $100,000 investment into the 10-year SGS bond using CPF OA funds, we might be able to get about $300 more per year. 

This would not take into consideration the loss of at least one additional month of CPF OA interest when using CPF funds to purchase the SGS bond. 

However, you would need to be prepared to hold the 10-year SGS bond to maturity, or you may face losses when trying to sell it. 

Hence, it might be good to weigh whether the additional interest earned is sufficient to compensate for having our money locked up in the 10-year SGS bond. 

Here’s a reminder just in case you forget amidst the Chinese New Year festivities - The subscription closing date for the latest SSB and 10-year SGS bond both fall on 26 January (Thursday).

If you are keen to find out how to buy the SGS bonds, you can follow our guide here. 

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