Singapore Savings Bond 10-year average yield hits year-to-date high of 3.32%

THE average return per year for the latest tranche of the Singapore Savings Bond (SSB) has reached a new year-to-date high of 3.32 per cent.

The October tranche of bonds, to be issued in November, has a first-year interest rate of 3.21 per cent. Interest rate at the 10-year mark stands at 3.63 per cent.

The allotment size is S$1 billion, with investment amounts starting at S$500 and issued in multiples of S$500. Applications for the bonds will open at 6 pm on Monday (Oct 2) and close at 9 pm on Oct 26.

Interest rates for the SSBs have risen consecutively for the past four tranches, after yields dropped to a low of 2.81 per cent in June this year.

Last month, the average 10-year return for the bond was 3.16 per cent – up for the fourth consecutive time, with an allotment size of S$800 million.

The rise in yields follows a series of US rate hikes throughout the year, and comes as investors continue to expect another round of increase in interest rates by the end of 2023.

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SSBs take their interest rates from the average yields of Singapore government bonds from the month before, but are subject to adjustments to ensure interest rates do not dip over time for inverted yield curves – where yields of short-term bonds become higher than those of long-term bonds.

SSB yields reached a historic high of 3.47 per cent for their 10-year average in December last year.