SSB 10-year return rises to 3.04%. Better than T-bills and fixed deposit?

What happened?

It’s been awhile since the Beansprout community was excited about the Singapore Savings Bond (SSB).

The latest SSB (SBAPR24 GX24040Z) offers a 1-year interest rate of 2.95%, and a 10-year average interest rate of 3.04%.

Like the yield on the Singapore T-bill, the interest rate on the SSB has gone up compared to the previous issuance. 

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

Is it worth applying for 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 2.95% from 2.74% in the previous issuance (SBJUL23 GX23070H)

The average 10-year return has also gone up to 3.04% from 2.88% in the previous issuance 

The increase in interest rate on the latest SSB reflects the higher Singapore government bond yield in recent weeks, inline with the bounce in US bond yields.

We have seen the 10-year Singapore government bond yield rise to 3.1%  on 29 Feb from about 2.9% at the start of the month. 

As a recap, SSB interest rates are linked to the yield of Singapore Government Securities (SGS) like the 10-year Singapore government bond. 

The rise in the 10-year average return of the SSB would hence correspond to the higher yield on the 10-year Singapore government bond in the previous month.

#2 – Demand may rise compared to the previous issuance

In the previous issuance of the SSB which offered a 10-year average return of 2.88%, total applications fell to just S$124 million.

This would be the lowest amount of applications for the SSB in the past year.

It would also be significantly lower than the S$1.9 billion of applications in the December issuance of the SSB. 

All eligible applicants within their individual allotment limits were able to get full allocation for the previous SSB.

While the 10-year average interest rate offered was higher than previous auction, some investors may have held back from applying for the SSB on the anticipation that the interest rate offered by the current issuance of the SSB will be higher. 

With the higher interest rate offered, demand for the latest SSB may increase.

In the SSB issuance for September 2023 when the 10-year average return was at 3.06%, there were S$523 million of applications for the SSB.   

In the SSB issuance for January 2024 when the 10-year average return was at 3.07%, there were S$868 million of applications for the SSB.   

This is below the S$900 million of SSBs offered in the latest issuance. 

#3 – Singapore T-bill and fixed deposits offer higher short term rates compared to SSB 1-year return

The cut-off yield for the latest 6-month Singapore T-bill auction jumped to 3.8%. 

This would be significantly above the 1-year interest rate on the latest SSB of 2.95%. 

Despite the cut in fixed deposit rates, the best 1-year fixed deposit rate of 3.20% is also higher than the 1-year interest rate on the latest SSB. 

Some high-yield accounts offer a higher interest rate compared to the 1-year interest rate on the SSB as well. 

To find out how the SSB interest rate compare with T-bills and fixed deposits, check out our Compare Yield Tool.

What would Beansprout do? 

The bounce in the 10-year average return on the SSB to above 3% should be good news for investors looking to lock in interest rates for the long term.

As such, we believe the SSB remains a decent option to consider, especially for investors who would like to have the flexibility to redeem anytime. 

However, T-bills and fixed deposits currently offer higher interest rates for investors who are looking to make their money work harder in the short term. 

With Singapore government bond yields rising once again, you might be wondering if it might be worthwhile waiting for the next SSB rather than apply for the current issuance.

The 10-year Singapore government bond yield was at 3.11% as at 1 March 2024, higher than the 10-year average yield of the latest SSB issuance. 

However, the yield may continue to fluctuate over the course of March, affecting the 10-year average return on the SSB next month. 

You can check out our SSB interest rate projection to help you to decide whether to apply for the current SSB or to wait for the next issuance.

To decide if it is worthwhile swapping your existing SSB with the latest SSB issuance, you can check out our swap calculator.

Applications for the latest issuance will close on 25th March 2024.  Learn more about how to apply for the SSB with our comprehensive guide to the SSB.

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