SSB allotment limit falls to S$20,500. Here’s why demand surged

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By Beansprout • 28 Nov 2023 • 0 min read

The higher 10-year average interest rate of 3.4% p.a. led to a surge in demand for the latest SSB issuance.

singapore savings bond ssb tbill allotment nov 2023
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What happened?

It seems like it's not just T-bills that are in high demand

Many investors were also eagerly anticipating the results of the latest Singapore Savings Bonds (SSB) allotment. 

The December issuance of SSBs (SBDEC23 GX23120Z) was oversubscribed as applications rose sharply. 

Applicants who applied for S$20,000 or lower were fully allotted, subject to individual allotment limits.

Applicants who applied for S$20,500 or higher were allotted either S$20,000 or S$20,500. About 27.83% of these applicants were allotted S$20,500.

Earlier, we shared that SSBs may be a good alternative compared to T-bills for investors looking to secure high interest rates for a longer period of time. 

Let us find out why investors are putting their money into SSBs once again.

SSB Singapore savings bond dec 2023 allotment result
Source: MAS

What we learnt from the latest SSB allotment results

#1 – Investor demand for SSB rose sharply

There were S$1.9 billion of applications for the December issuance of the SSB.

This would represent a sharp increase from the S$1.2 billion of applications in the previous issuance, and S$140 million of application in the July issuance. 

In fact, it would be above the S$1.7 billion of applications in the December 2022 issuance of the SSB, when the 10-year average interest rate reached a record high of 3.47%.

ssb singapore savings bond applications nov 2023

Some SSB investors may be disappointed that the maximum allotment fell to S$20,500 in the latest auction compared to S$47,500 in the previous one.

However, the allotment limit is higher than most of the second half of 2022.

For example, the maximum allotment was just S$14,500 in the December 2022 issuance of the SSB, and had fallen to as low as S$9,500 in the August 2022 issuance of the SSB.

ssb singapore savings bond allotment nov 2023

#2 – Higher interest rates led to higher demand for SSBs

The surge in applications is likely due to higher interest rates in the latest SSB issuance.

The 1-year interest ate on the latest SSB has risen to 3.30% from 3.21% in the previous issuance (SBOCT23 GX23100T)

The average 10-year return has also gone up to 3.40% from 3.32% in the previous issuance (shown in chart below).  

ssb singapore savings bond dec 2023 interest rate
Source: MAS

In fact, the average 10-year return of 3.4% in the December issuance of the SSB would be one of the highest on record. 

#3 – Interest rates may fall in next SSB

Apart from the higher interest rates offered in the latest issuance of the SSB, some investors might have put in a higher application amount in the December issuance of the SSB with the expectation that the next SSB may offer a lower return.

Earlier, we shared that Singapore government bond yields have fallen sharply in the past month as investors gained confidence that the US Fed may stop hiking interest rates.

ssb 10-year return singapore government bond yield nov 2023
Source: Tradingview

As SSB interest rates are linked to the yields on the 10-year Singapore government bond yield, this may mean that average 10-year return offered by the next SSB may be lower compared to the latest issuance too. 

Based on our calculations as of 24 November, the projected average 10-year return for the next SSB may fall to 3.05%.

With the latest data available as of 28 November, the projected average 10-year return on the next SSB may fall to 3.08%.

This would be markedly lower than the 10-year average return of 3.40% offered by the latest issuance of the SSB. 

ssb singapore saving bond projection dec 2023
Source: Beansprout as of 28 Nov 2023

What would Beansprout do?

We like the Singapore Savings Bonds as a simple and low-cost way to generate safe returns, especially over the long term. 

The latest SSB looks particularly attractive with a 10-year average return of 3.4%, one of the highest in history. 

With the higher demand, it wasn’t a surprise to see a decline in the allotment limit to S$20,500 for the latest SSB. Thankfully, it still remains above the allotment limit that we saw for most of the second half of 2022. 

If you would like to continue to monitor the potential interest rate for the next SSB issuance, check out our SSB interest rate projection tool. 

Check out our swap calculator to find out if it may be worthwhile to swap previous issuances of your SSB with the next SSB to earn a potentially higher interest.

For those who applied for the latest issuance, the issuance will be done by end of day on 1 December. 

ssb singapore savings bond closing date november 2023
Source: MAS

If you could not get your intended allocation of the SSB and are looking to park your spare cash, find out how you can do so with the Singapore T-bills. best high-yield savings accounts, best fixed deposits, or best cash management accounts.  

Join the Beansprout Telegram group and Facebook group for the latest insights on Singapore stocks, REITs, bonds and ETFs. 

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Should you wait for the next SSB?

Discover the projected interest rate for the next Singapore Savings Bond (SSB) issuance.

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