Apart from the auction result on the 6-month T-bills, many investors were also very excited to know how much allocation they'd get for the Singapore Savings Bonds (SSBs)
After all, the interest rates on the latest SSBs just reached a record high in the November issuance.
So here's the the allotment result for the November issuance of the Singapore Savings Bond (SSB) (SBNOV22 GX22110A).
Applicants who applied for S$10,000 or lower were fully allotted, subject to individual allotment limits.
Applicants who applied for S$10,500 or higher were allotted either S$10,000 or S$10,500.
About 29.15% of these applicants were allotted S$10,500.
What we learnt from the SSB allotment results
#1 - Strong investor interest in SSBs but demand below previous peak
There were total applications of S$2.2 billion for the November issuance of the SSB (SBNOV22 GX22110A).
This was higher than the $1.1 billion of applications were received in the October Issuance (SBOCT22 GX22100X). The maximum allotment then was at $42,500.
However, it is still below the S$2.4 billion of applications received for the August issuance (SBAUG22 GX22080V). This might be the reason for the higher maximum allotment of S$10,500 compared to S$9,500 in August.
#2 – Higher interest rates did not manage to draw significantly more applications for SSBs
The lower subscriptions for the November issuance compared to the August issuance may come as a surprise to some, especially with the record high interest rates for the latest issuance.
You will receive an interest rate of 3.08% for holding the November SSB for one-year. If you hold the SSB for 10 years, you will receive an average interest rate of 3.21%.
SSB interest rates – November 2022
This would be higher than the interest rates in the August issuance.
You will receive an interest rate of 2.00% for holding the August SSB for one-year. If you hold on to it for 10 years, you will receive an average interest rate of 3.00%.
SSB interest rates – August 2022
#3 – Demand moved towards T-bills
Where we think investor interest has moved towards is the 6-month Treasury Bill.
There were S$1.8 billion of non-competitive bids put in for the 6-month T-bill during the auction on 27 October, an increase from S$1.1 billion in the auction on 13 October.
This is a sign that some investors may have decided to allocate more of their portfolio towards the T-bills rather than SSBs.
What would Beansprout do?
We continue to like the Singapore Savings Bonds as a simple and low-cost way to generate safe returns.
For those who applied for the November issuance, the issuance will be done by end of day on 1 November.
We also see the T-bill as a sound way to earn a decent yield especially for shorter maturities.
By investing in these two government-backed bonds, we would be able to make our money work harder rather than putting it in a bank.
Join our Telegram group if you have any questions about the Singapore Treasury-bill, SGS Bond, or SSB!
- How to capture higher interest rates using a bond fund.
- T-bills vs REITs – What are we buying now as inflation eases?
- T-bill demand surge pushes yield down to 4.0% p.a. What we learnt from the record high number of bids in the latest auction.
Want to learn more? Discover more Bond-related insights here.