Latest Singapore Savings Bond less than half subscribed

THE latest tranche of Singapore Savings Bond (SSBs) allotted on Friday (Feb 24) received a total of S$261.1 million in applications, out of the S$600 million offered.

This means that only 43.5 per cent of the total issuance was subscribed. The total amount allotted was S$258.3 million, and those successful will be issued the notes on Mar 1.

Enthusiasm in SSBs waned after interest rates fell from a record high of 3.26 per cent in the first-year interest rate offered in January. The average 10-year return for the January tranche was 3.47 per cent.

In comparison, the latest round of SSBs offered a first-year interest rate of 2.76 per cent and a 10-year average return of 2.9 per cent.

Last month, SSBs were also undersubscribed after the Monetary Authority of Singapore (MAS) received only S$477.1 million in applications, out of the S$700 million allotment. A sum of S$472.3 million was allotted in the end.

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 of short-dated bills exceed those of longer-dated bonds.

Separately, an auction for a two-year Singapore Government Securities (SGS) bond also closed on Friday with a cut-off yield of 3.66 per cent per annum.

The auction is a reopening of an existing bond that matures on Jun 1, with a coupon rate of 2.375 per cent per annum.

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The SGS auction drew a total of S$5.4 billion in applications for the S$3.2 billion offer, giving it a bid-to-cover ratio of 1.7. Non-competitive bids totalled S$502.7 million and were fully allotted. The average yield for the bond instrument stood at 3.37 per cent, while the median yield was 3.49 per cent. MAS was allotted S$559.5 million in this auction.