Demand for latest Singapore Savings Bonds hits year-to-date high; 10-year average return at 3.4%
Tan Nai Lun
DEMAND for the latest tranche of Singapore Savings Bonds (SSBs) has hit a year-to-date high, allotment results released on Tuesday (Nov 28) indicated.
The December issuance received a total of S$1.9 billion in applications, exceeding the S$1 billion on offer. A total of S$1.8 billion was applied within individual allotment limits.
This comes as the 10-year average return for the December issuance is the highest offered for issuances in 2023. The latest tranche is offering a first-year interest rate of 3.3 per cent and a 10-year average return of 3.4 per cent.
The rise in demand tracks the climb in yields offered by the SSBs.
The 10-year average return has been on a rise for the past five tranches.
In the previous tranche that was issued in November, yields hit 3.32 per cent, which was then a year-to-date high.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Applications for SSBs also crossed the S$1 billion mark in the November issuance. Then, the bonds received a total of S$1.2 billion in applications for the S$1 billion on offer.
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 that interest rates do not dip over time for inverted yield curves, in which the yields of short-dated bills exceed those of longer-dated bonds.
The latest tranche of SSBs were offered and allotted through the quantity ceiling format.
Applicants who applied for S$20,000 or lower were fully allotted.
Applicants who applied for S$20,500 or higher were allotted either S$20,000 or S$20,500; around 27.8 per cent of these applicants were selected at random and allotted the additional S$500.
The SSBs, which closed on Nov 27, will be issued on Dec 1.
Copyright SPH Media. All rights reserved.
