SINGAPORE Savings Bonds (SSBs) allotted on Wednesday (Dec 28) were marginally oversubscribed, with investors applying for up to S$172,500 being fully allotted in an issuance that offers less attractive yields.

According to the Monetary Authority of Singapore (MAS) website, the fiscal agent for the government bond issuances received S$909.7 million in applications for the allotment of S$900 million.

Due to less competition, applicants were able to get a higher amount fulfilled.

Applicants who applied for S$172,500 or lower were fully allotted, subject to the individual allotment limits.

Applicants who applied for S$173,000 or higher were allotted either S$172,500 or S$173,000.

A randomly selected 95.9 per cent of these applicants were allotted the additional S$500.

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This tranche of SSBs to be issued in January 2023 is offering a first-year and 10-year average return of 2.95 and 3.26 per cent, respectively – lower than the corresponding 3.26 per cent and 3.47 per cent offered for the December tranche.

The first-year interest rate for this tranche should have been much higher at 3.78 per cent, if not for the government’s intention to provide stepped-up returns over the risk-free fixed income security’s 10-year tenor.

SSBs take their interest rates from the average yields of Singapore government bonds from the month before.

They are, however, subject to adjustments to ensure interest rates do not dip over time for inverted yield curves, in which the yields for short-dated bills exceed those of longer-dated bonds.

As the November bond yield curve was inverted, the present SSB’s interest rates for the early years were adjusted.

The allotment last month, by contrast, was 1.7 times oversubscribed, with those who applied for up to S$14,000 fully allotted.

Those who applied for S$14,500 or higher were allotted either S$14,000 or S$14,500, and nearly 40 per cent of them were allotted the additional S$500 on a random basis.