Singapore Savings Bond 2018 Dec 2.97%pa – Should You Buy?

Singapore Savings Bond Dec 2018, announced on 1 Nov, offers investors 1.89% to 3.04%pa interest. This translates to an average annualised interest of 2.57%pa over 10 years.

This month’s Singapore Savings Bond Dec 2018 offer comes on the back of 2 key developments. First, Oct 2018 was a horrible month for equity investors. There was serious upheaval in the equity markets around the world that made investors very uncomfortable. You too might have been affected.

Second, S$500 million worth of Temasek Bond T2023 was successfully sold to both retail and institutional investors. This was the first time retail investors were offered a tranche (You would be able to read more about the Temasek Bond offer in my lengthy post here). Both Temasek Bond T2023 (5 year maturity) and Astrea IV PE bond (10 year maturity) have widened choices that retail investors have in the corporate S$ bond market.

You would have been tempted to expand your investment in bond assets given these 2 key developments. And, by coming here, you must be interested in the Singapore Savings Bond. Would SSB Dec 2018 be a good bond asset for your portfolio? How do the interest rates compare to other bonds and fixed income products? Is this an opportune time to accumulate SSB? Read on for a full analysis of the bond below.

Summary of Singapore Savings Bond Dec 2018

First, here’s a quick low-down of all you need to know about SSB Dec 2018 so that we are on the same page when discussing about these bonds.

  • Bond ID: GX18120X
  • Bond yield: 1.89% to 3.04%pa
  • Interest payment dates: 1 Jun, 1 Dec every year
  • Tenor: 10 years (Issue date: 3 Dec 2018, Maturity date: 1 Dec 2028)
  • Tranche size: S$300 million
  • Issuer: Government of Singapore

Timeline You Must Know

You can start applying for this bond through POSB/DBS, OCBC, UOB ATMs, internet and mobile banking platforms from 1 Nov 2018. Singaporeans, PRs and foreigners can apply for the Singapore Savings Bonds. You will need to be above 18 years old and possess a Central Depository (CDP) Account.

  • Deadline for application: 27 Nov 2018 9pm (do not miss this deadline!)
  • Allotment results: 28 Nov 2018 after 3pm

How Does Singapore Savings Bond Dec 2018 Compare with Other Fixed Income Products

Let’s compare the interest rates offered by Singapore Savings Bond Dec 2018 with yields from other fixed income products. We all have a finite amount of savings so naturally we should choose the one that best suits our risk appetite and horizon.

The charts presented below consist of data dated 1 Nov. They have been pieced together with information that I scour monthly throughout the bond markets, so enjoy the summarised info.

Singapore Savings Bond Dec 2018 vs SGS Bonds

First, it is clear that the Singapore Savings Bond Dec 2018 is as attractive as SGS bonds – it offers similar interest rate returns. In fact, SSB Dec 2018 would be a better choice because buying SGS bonds via SGX will incur brokerage charges that will erode interest rate returns; applying for SSB only costs $2 per application.

However, SGS bonds maturing in around 1 year are more attractive than SSB Dec 2018 – 2 of them offer at least 2% yield whereas SSB Dec 2018 only offers 1.89% for the 1st year. So, for those of you who want to park your savings short term, SGS bonds might be a better alternative than SSB (even after accounting for brokerage charges).

(Note that data for SGS bonds are dated 1 Nov so you need to update your analysis accordingly as SGS bond yields would have changed after 1 Nov)

*Phone users: Please rotate screen to landscape to see full chart (Bug fix is on the way)

Singapore Savings Bond Dec 2018 vs Fixed Deposits

In the charge below, you will find a more interesting analysis that pits SSB Dec 2018 against Fixed Deposit interest rates offered by main banks in Singapore. A total of 7 banks are represented here (DBS, OCBC, UOB, SCB, Maybank, RHB, Hong Leong), providing 12 Fixed Deposit products.

The winner is obvious: SSB Dec 2018. Only 1 Fixed Deposit, offered by CIMB, has a higher interest rate – 1.90% for 1 year maturity. And, another advantage of SSB is that you can redeem Singapore Savings Bond with accrued interest anytime whereas you will lose the accrued interest if you terminate a Fixed Deposit earlier.

I have also attached the data in a table after the chart that displays the updated Fixed Deposit interest rates offered by banks.

*Phone users: Please rotate screen to landscape to see full chart (Bug fix is on the way)


Singapore Savings Bond Dec 2018 vs Corporate S$ Bonds

Here, we see something different. SSB Dec 2018 has lower interest rates than all other listed corporate S$ bonds. It is natural as Singapore Savings Bond is Singapore Government backed and it is as good as being default risk-free. All other corporate bonds should offer higher interest rates to compensate investors for accepting default risk.

My point here is not to say the obvious but to highlight a few corporate bonds that are worth considering. (See table below chart that displays the data used in the chart)

1. Temasek Bond T2023 2.7% with 5-year maturity. It was priced at 2.34% yield as of 1 Nov. If you want to invest a large amount (say >S$100,000), then you will find it difficult to do so with Singapore Savings Bond as there is a investment cap and oversubscribed issues are subject to ballot and reduced allotment. Temasek Bond T2023 can help breach this gap as it can be purchased on SGX in any quantity as long as there is market liquidity. You can read more about this bond in my blog article for its issuance.

2. CapitaMall Trust, Frasers Centerpoint and Astrea IV bonds are suitable bonds for consideration if you wish to accept more risk for a better interest rate return.

*Phone users: Please rotate screen to landscape to see full chart (Bug fix is on the way)

Bond IDMaturity (Years)Yield (%pa)
Oxley 1911051.017.62
Aspial B2004011.427.57
Perennial 2004291.495.04
Oxley 2005181.556.18
Aspial B2008281.827.46
CapitaMall Trust2.312.50
Frasers Centrepoint3.563.05
Temasek 2310254.982.34
Astrea IV 2806149.623.64

Singapore Savings Bond Dec 2018 Vs Previous SSB Issues

Now that we have looked at the attractiveness of SSB Dec 2018 compared to all other fixed income investment choices in the market, you should also see how this month’s issue compares with previous SSB issues. You will have a better idea of how SSB rates have been trending and how they might trend in the near future.

SSB Yield For Last 6 Issue 201812

Short-to-Medium Term Interest Rates Are Excellent

The first key takeaway that you can tell from the chart above is that Singapore Saving Bond Dec 2018 offers good interest rates from Year 1 to Year 5. If you have been waiting for the right SSB, this is a good time to invest.

Long Term Interest Rates Are Less Attractive

The yield curve is flattening – shorter term rates are increasing faster than longer term yields. For those of you holding on to earlier Singapore Savings Bond issues, you should continue to hold them if you want to hold them for long term. Long term rates are creeping up but by how much, I am not sure.


In my opinion, SSB Dec 2018 is a good choice for those who want to park their excess funds temporarily while riding out the storm in the equity markets. Short term interest rates have improved and are much better than those offered by banks’ Fixed Deposits. The beauty of Singapore Savings Bond is that it can be redeemed in any month with accrued interest so you can have the funds when they are required.

One problem is that the Singapore Savings Bond tend to be oversubscribed in popular months and I suspect this will be one of those months. What this means is that you might not get the full amount that you apply for – the typical allotment starts from S$10,000. If you have excess funds that need to be deployed or shifted out from volatile equity markets, it is best to consider alternatives such as corporate S$ bonds that I have mentioned above.

Verdict: Should Buy!

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