In this Singapore Savings Bonds Investment Guide, you will find consolidated information on the latest Singapore Savings Bonds issue. This will help you make an informed decision whether to invest/divest your SSBs. Bookmark this page so that you can refer to every month.
This month, we look at Singapore Savings Bonds Aug 2018 (SSB Aug 2018 – GX18080F).
Key Details at a Glance
The latest Singapore Savings Bonds issue is Singapore Savings Bonds Aug 2018. Key information are summarised and presented below. For complete information, head to MAS Public Notice circular on SSB Aug 2018.
- Bond ID: GX18080F
- Tranche size: S$250 million
- Issue date: 1 Aug 2018
- Maturity date: 1 Aug 2028
- Interest payment dates: 1 Aug, 1 Feb 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 Jul 2018.
- Deadline for application: 26 Jul 2018 9pm
- Allotment results: 27 Jul 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 to rise mirroring US interest rates whereas long term rates have pared gains after its stellar rise in May. Yield curve has flattened.
The Singapore Savings Bonds Aug 2018 offers the highest short term coupons among the 6 recent issues. This is great news for short term investors looking to park cash in SSB as opposed to fixed deposits, bank accounts or even money market funds. For long term investors seeking to lock in rates, Singapore Savings Bonds Aug 2018 is still an attractive option; it offers 2.57%pa with a holding period of 10 years.
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, 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.
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
Above, we learnt that the latest Singapore Savings Bonds issue SSB Aug 2018 still offers attractive interest rates compared to previous SSB issues. What about SSB Aug 2018 vs other fixed income products such as High Interest Savings Accounts, Fixed Deposits and Singapore Government Bonds SGS? Does Singapore Savings Bonds Aug 2018 offer better rates?
We have compiled the interest rates offered by different products into a table that you will find below for comparison. It is updated monthly.
Clearly, Singapore Savings Bonds Aug 2018 offers the highest 1-year interest rate (1.78% pa) compared to common Fixed Deposits offered by banks. It is higher than Maybank’s 1-year Fixed Deposit that offers 1.75%. This is the second consecutive month that SSB offers a higher 1-year rate than rates offered by Fixed Deposits.
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 medium to long term, SGS bonds offer similar interest rates compared to SSB Aug 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 Apr 2018*||1.78%||1.97%||2.29%||2.57%|
|Singapore Government Bonds SGS 2Y||1.95%|
|Singapore Government Bonds SGS 5Y||2.25%|
|Singapore Government Bonds SGS 10Y||2.49%|
|OCBC Fixed Deposit 1year**||1.35%|
|UOB Fixed Deposit 10months**||1.40%|
|SCB Fixed Deposit 1year**||1.40%|
|Maybank Fixed Deposit 1year**||1.75%|
|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 1.35% for 12-month deposit (From 1 Jul)
- UOB: up to 1.40%pa for 10-month deposit (2 Jul to 31 Jul)
- Standard Chartered: up to 1.40%pa for 12-month deposit (1 Jul to 31 Jul)
- Maybank: up to 1.75%pa for 12-month deposit (From 21 Jun)
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 the latest Singapore Savings Bonds issue SSB Aug 2018 are the highest since a long time due to continued rise in short term interest rates last month. I would definitely still be tempted to invest some funds in this issue, while keeping some in anticipation of further rise in interest rates – I have already invested and allotted the full amounts in SSB May 2018 and SSB Jul 2018.
The demand for Singapore Savings Bonds has been strong. 5 out of the recent 6 SSB issues were oversubscribed. The recent SSB Jul 2018 was oversubscribed by 227% despite an increase in offer size from S$200 million to S$250 million. More people are subscribing for SSB.
It is likely that Singapore Savings Bonds Aug 2018 will also be oversubscribed. In this over-subscription scenario, every application will be fulfilled but partially if their applied amount is higher than the allotment limit. Going by previous issues, I believe that the allotment amount this month should be around $10,000 to $20,000. (I predicted $10,000 to $20,000 for SSB Jul 2018; a maximum of $13,500 was allocated per investor for that issue). Remember this tip: even if you can apply for $100,000, you may only end up with less. 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 Aug 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 deposit 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 latest Singapore Savings Bonds issue or the next month’s SSB issue.