In this Singapore Savings Bonds Investment Guide, you will find consolidated information on every month’s Singapore Savings Bonds. This will help you make an informed decision whether to invest/divest your SSBs. Do bookmark this page so that you can refer to every month.
This month, we look at Singapore Savings Bonds Jun 2018 (SSB Jun 2018 – GX18060H).
Key Details at a Glance
The latest issue is Singapore Savings Bonds Jun 2018. Key information are summarised and presented below. For complete information, head to MAS Public Notice circular on SBB Jun 2018.
- Bond ID: GX18060H
- Tranche size: S$200 million
- Issue date: 1 Jun 2018
- Maturity date: 1 Jun 2028
- Interest payment dates: 1 Jun, 1 Dec every year
Application Timeline You Must Know
You can start applying for this month’s SSB through POSB/DBS, OCBC, UOB ATMs and internet banking platforms from 2 May 2018.
- Deadline for application: 25 May 2018 9pm
- Allotment results: 28 May 2018 after 3pm
To learn more about bond application, do head our page on Singapore Savings Bonds: Everything You Need to Know. If this is your first time applying or you are considering whether to apply, you are strongly encouraged to read it before application!
Are Interest Rates Attractive?
Comparison with Previous SSB Issues
Short term rates have continued their rise, taking cue from US rates, while long term rates have edged up slightly too. Singapore Savings Bonds Jun 2018 offers the highest Year 1 coupon of 1.68% pa among the 6 recent issues. It also offers the highest Year 2 and Year 3 coupons. For short term investors, this is great news for you – better than parking short term funds into fixed deposits. For long term investors seeking to lock in rates, coupons for Year 7 to 10 are the highest of all recent 6 issues.
The graph below illustrates interest rates (in %pa) offered by recent 6 SSB issues. Only the Year 1, Year 5 and Year 10 coupon trends are plotted. The set of data points used to plot this graph is shown in the following table for reference.
In addition to coupons, the average return is an important metric for a long-term bond investor. The graph below illustrates average returns (in %pa) offered by recent 6 SSB issues. Similarly, only the Year 1, Year 5 and Year 10 trends are plotted. The set of data points used to plot this graph is also shown in the following table.
To see a wider range of data points, do head to our section on Singapore Bonds Interest Rates where you will find the entire history of SSB interest rates and average returns. Tabulated historical rates average returns are available for download so you are welcome to play around and analyse in further detail.
MAS also has an official platform on SSB Interest Rates for bond investors to search out information on issued SSBs (interest rates, average returns and bond details). You can definitely check it out too.
Comparison with Fixed Income Products
Seeing that SSB Jun 2018 offers attractive coupons for investors to invest in the short run, we will now analyse how SSB compares with fixed income products such as High Interest Savings Accounts, Fixed Deposits and Singapore Government Bonds SGS. We have compiled the rates offered into a table that you will find below for comparison. It is updated monthly to reflect latest rates.
Currently, SSB Jun 2018 offers the highest 1-year interest rate (1.65% pa) compared to common Fixed Deposits offered by banks. It is tied with Maybank’s 1-year Fixed Deposit that also offers 1.65%. This is the first time SSB has the highest 1-year rate among Fixed Deposits offered by banks, definitely making it very attractive for short term investors.
High Interest Savings Accounts still offer better interest but the gap is surely closing. It must also be noted that High Interest Savings Accounts provide higher deposit interest rates with the caveat that savers carry out additional banking transactions – you would be familiar with those transactions if you have UOB One, OCBC 365, DBS Multiplier or BOC SmartSaver accounts. Another key thing to note is that the attractive rates offered by these Savings Accounts are subject to change any time whereas rates are locked in at issue for Singapore Savings Bonds.
Over the longer term, SGS bonds offer similar interest rates compared to SSB Jun 2018. However, they are subject to market movement and therefore, capital appreciation or depreciation, if you choose to redeem (open market transaction) before maturity.
|Singapore Savings Bonds SSB Jun 2018*||1.68%||1.91%||2.10%||2.43%|
|Singapore Government Bonds SGS 2Y||1.95%|
|Singapore Government Bonds SGS 5Y||2.18%|
|Singapore Government Bonds SGS 10Y||2.60%|
|OCBC Fixed Deposit 1year**||1.25%|
|OCBC Fixed Deposit 2year**||1.45%|
|UOB Fixed Deposit 10months**||1.35%|
|SCB Fixed Deposit 1year**||1.35%|
|Maybank Fixed Deposit 1year**||1.65%|
|DBS Multiplier Account***||Up to 3.5%|
|OCBC 360 Account***||Up to 3%|
|UOB One Account***||Up to 2.43%|
|BOC SmartSaver Account***||Up to 3.75%|
*Average Returns; **Promotional rate; ***Requires banking or investment transactions.
- OCBC: up to 1.25% for 12-month deposit or up to 1.45% for 24-month deposit (From 2 May)
- UOB: up to 1.35%pa for 10-month deposit (2 May to 31 May)
- Maybank: up to 1.65%pa for 12-month deposit (From 27 Mar)
- Standard Chartered: up to 1.45%pa for 12-month deposit (Until 31 May)
Singapore Savings Bonds Investment Strategy
**Disclaimer: I am not an investment consultant nor am I trained to do so. The short tidbit provided below is my opinion of how I will utilise SSB in my own portfolio.
The coupons for Singapore Savings Bonds Jun 2018 are as attractive as the coupons offered by SSB May 2018. The short term rates from Year 1 to Year 3 are the highest in recent SSB issues. Year 1 and Year 2 rates are better than those offered by banks for Fixed Deposits. I would again be tempted to invest some of my funds for this issue.
Against the backdrop of increasing demand for SSBs and better interest coupons, it is highly likely that Singapore Savings Bonds Jun 2018 will be also oversubscribed. Going by the allotment amounts offered in the last 3 oversubscribed issues (SSB Feb 2018, SSB Apr 2018, SSB May 2018), I believe that the allotment amount should be around $10,000 to $20,000 for SSB Jun 2018 (I predicted $20,000 to $30,000 for SSB May 2018 but it turned out that the demand was so high than only maximum of $13,000 was allocated per investor).
There is no point getting too excited about shifting all your funds into SSB Jun 2018. Even if you can apply for $100,000, you may only end up with $10,000 to $20,000. So, plan your funds well.
I would love to hear from you guys too. Leave a comment below and I will be glad to discuss.
Guidelines to Applying for Singapore Savings Bonds
To subscribe to SSB Jun 2018, you can do so through POSB/DBS, OCBC, UOB ATMs and internet banking platforms. You will also need a Central Depository (CDP) Account. MAS will deliver the Singapore Savings Bond to you through this channel. Note that a $2 processing fee will be charged.
You should also check out your bank’s website on Singapore Savings Bonds for more information and specific application instructions.
Final tip: SSBs are announced at the start of the month but only issued at the start of the following month. Interest therefore only starts to accrue then. Do not apply for the bonds early. Instead, apply for them on or close to deadline day to maximise utilisation of your funds. Another excellent reason to do so is to observe interest yield on SGS bonds throughout the month to decide whether to invest in this SSB or the next issue’s SSB.