SSB return jumps above 3%. Better than fixed deposit and T-bills?

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By Beansprout • 02 Aug 2023 • 0 min read

The latest Singapore Savings Bonds (SSB) offers a 1-year return of 3.01% and a 10-year average return of 3.06%. We analyse how it compares against T-bills and fixed deposits.

SSB Singapore Savings Bond September 2023
In this article

What happened?

With all the attention on T-bills, fixed deposit accounts and savings accounts, you might have missed out on the latest interest rates offered by the SSB.

Here's the good news - the interest rates on the latest SSB (SBSEP23 GX23090F) have gone up, with the 1-year interest rate at 3.01% p.a., and the average return over 10 years at 3.06% p.a.

Let us examine if it might be worthwhile applying for the latest issuance of the SSB. 

SSB August 2023 interest rate
Source: MAS

 

Is it worth applying to the latest Singapore Savings Bonds (SSBs)?

#1 – 1-year and 10-year interest rate higher than previous issuance 

The 1-year interest rate on the latest SSB has risen to 3.01% from 2.97% in the previous issuance (SBJUL23 GX23070H)

The average 10-year return has also gone up to 3.06% from 2.99% in the previous issuance (shown in chart below). 

SSB interest rate July 2023
Source: MAS

 

In the previous issuance of the SSB, all applicants within the individual allotment limits were able to get full allocation, as there were only S$299 million of applications for S$600 million of SSBs offered. 

SSB allocation July 2023
Source: MAS

 

As shown in the chart below, total SSB applications of S$299 million in the August issuance is slightly above the previous month's applications, but remains significantly below the recent peak of S$2.2 billion in November 2022. 

SSB applications August 2023.png

#2 – Singapore T-bill and fixed deposit accounts offer higher interest rate than SSB 1-year return

The 1-year interest rate of 3.01% in the latest SSB issuance is lower than the cut-off yield of 3.74% in the latest 1-year Singapore T-bill auction in July, and the closing yield on the 1-year T-bill of 3.71% on 2 August 2023. 

T-bill yield August 2023
Source: MAS

 

However, the SSB offers more flexibility compared to the T-bill, as it is capital protected and can be redeemed anytime.

SSB vs T-bill.jpeg
Source: Bondsupermart

 

The 1-year interest rate is below the effective interest rate on some savings accounts. For example, the GXS savings account is offering an interest rate of 3.48%, while CIMB is offering new customers an interest rate of 3.5% for six months on the FastSaver account. 

The 1-year interest rate of 3.01% is also lower than the best 1-year fixed deposit rate of 3.45%. 

#3 – 10-year average return still higher than historical average

It is worth noting the the 10-year average return on the SSB of 3.06%  is higher than the average 10-year return on the SSB of 1.86% over the past five years.

 

What would Beansprout do?

SSB application deadline August 2023
Source: MAS

Many investors would be happy to see that the 1-year interest rate on the latest SSB has gone up compared to the previous month. 

However, if you are interested to earn a higher interest in the short term, there are other products which currently offer a higher interest rate also worth considering.

For example, you can earn an interest rate of around 3.5% p.a. without having to jump through hoops on some savings accounts. 

Some banks have also recently raised their fixed deposit interest rates, and you can earn an interest rate of 3.45% p.a. with a 12-month fixed deposit.

Lastly, the latest 6-month Singapore T-bill offered a cut-off yield of 3.85%. 

For investors who are interested to earn a higher interest over a long period of time (say 10 years), while having the flexibility to redeem anytime, the SSB remains an attractive option as the 10-year average return on the SSB is higher than the average levels in the last 5 years. 

Applications for the latest issuance will close on 28th August 2023. Learn more about how to apply for the SSB with our comprehensive guide to the SSB.

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