SSB demand rises with higher interest rates. Here’s what to look out for next.

By Beansprout • 29 Sep 2023 • 0 min read

The higher 10-year average interest rate of 3.16% p.a. for the latest SSB issuance led to increased demand.

ssb singapore savings bonds allotment sep 2023

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What happened?

With the higher cut-off yield on the latest T-bill auction drawing investor interest, some of you may have missed out the allotment result for September’s Singapore Savings Bonds (SSBs).

The October issuance of the SSBs (GX23100T) saw significantly higher applications compared to the previous month.

However, as total applications were still below the total amount of SSBs offered, all eligible applications within individual allotment limits were able to get full allocation of the SSB.

Let us dive deeper to understand what we can learn from the latest SSB allotment.

Source: MAS


What we learnt from the latest SSB allotment

#1 – Investor demand for SSB increased

There was S$688.5 million of applications for the October issuance of the Singapore Savings Bonds. 

This marks the third consecutive month of increase in applications for SSBs from the low of S$140 million for the July 2023 issuance.

However, it remains below the applications of S$700 million to S$800 million per month in the April and May 2023 issuances. 

As the total applications were below the S$800 million of SSBs offered, all eligible applications within individual allotment limits were able to get full allocation of the SSB.

ssb applications october 2023

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

The increase in applications compared to the previous month is likely due to the higher interest rates in the latest SSB issuance. 

ssb interest rate october 2023
Source: MAS

The 1-year interest ate on the latest SSB has risen to 3.05% from 3.01% in the previous issuance (SBSEP23 GX23090F)

The average 10-year return has also gone up to 3.16% from 3.06% in the previous issuance (shown in chart below).  

ssb interest rate sep 2023
Source: MAS

In fact, the average 10-year return of 3.16% in the October issuance of the SSB would be the highest so far this year, and also one of the highest 10-year average return historically.

#3 – Investors may be awaiting higher interest rates in upcoming SSB

Despite the higher interest rates, demand for SSBs may not have recovered to previous highs as some investors may be awaiting higher interest rates in the upcoming issuance. 

As a recap, SSB interest rates are linked to the yields of Singapore Government Securities (SGS). The interest rates on the SSB are linked to the daily average SGS yields as published by MAS in the previous month.

As an investor in the SSB, your average annual compounded return over any period (eg 10 years) should broadly correspond to the SGS yield of the same holding period (eg 10 year SGS), albeit with a one-month lag.

In other words, the average 10-year return on the upcoming SSB issuance would largely correspond to the yield on the 10-year Singapore government bond or SGS in the previous month. 

From the chart above, the 10-year Singapore government bond yield has moved up sharply in the previous month after the US Fed indicated that interest rates may stay higher-for-longer

As such, some investors may have held back from applying for the latest SSB as they  await the higher interest rates in the upcoming SSB issuance. 

singapore 10-year bond yield september 2023
Source: Tradingview


What would Beansprout do?

We continue to like the Singapore Savings Bonds as a simple and low-cost way to generate safe returns. 

While the 10-year average return on the SSB may not look attractive compared to other products in the market currently, it is still higher than the average 10-year return on the SSB over the past five years.

In particular, we will be awaiting the upcoming SSB issuance to find out how much the average 10-year return will rise further to reflect the increase in the 10-year government bond yield over the past month. 

For those who applied for the October issuance, the issuance will be done by end of day on 2 October. 

ssb allotment timeline october 2023
Source: MAS

Learn more about how to apply for the SSB with our comprehensive guide to the SSB.

If you keen to find ways to make your savings work harder, we find out how you can do so with the Singapore T-bills. best high-yield savings accounts, and best fixed deposits

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

Should you wait for the next SSB?

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

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