July issue of Singapore Savings Bonds opens with record low rates: 0.3% for first year, 0.8% per annum on average

THE July issue of Singapore Savings Bonds (SSBs) opened on Monday evening with yet another record-low rates. The first-year interest rate stands at 0.3 per cent while the average return over 10 years is 0.8 per cent per annum.

The rock-bottom rates come amid a declining interest rate environment and higher demand for government bonds.

SSBs offered in any given month will pay a coupon that is linked to the daily average Singapore Government Securities (SGS) yields as published by the Monetary Authority of Singapore in the previous month. In the present risk-off environment, demand for SGS has led to a rally in the risk-free instrument, pushing up their prices, which are inversely related to yields.

For example, the daily average 10-year Singapore government bond yields have gone from 1.29 per cent in March to 0.90 per cent in April, and then to 0.83 per cent in May. 

The low interest rates might have driven down interests in SSBs, as seen in the sharp decline in total amounts applied for recent issues. Redemption stood at an average of 17.8 per cent.

The latest issue closes at 9pm on June 25.