Singapore Savings Bond 10-year average yields up at 3.16%

AVERAGE interest rates over 10 years for the Singapore Savings Bond (SSBs) are up for the fourth consecutive tranche, at 3.16 per cent.

The latest tranche, which opened on Monday (Sep 4), offers a first-year interest rate of 3.05 per cent. The interest rate at the 10-year mark is 3.48 per cent.

This is higher than the previous tranche of SSBs, which offered a 10-year average return of 3.06 per cent. The first-year interest rate for the last issuance, issued on Sep 1, stood at 3.01 per cent.

The latest round of SSBs will close on Sep 26, and its issue date is Oct 2. The total amount offered is S$800 million.

This round’s issuance size is larger than the previous tranche, which offered S$600 million.

SSBs’ interest rates have been rising since hitting a low in May this year, when the 10-year average return stood at 2.81 per cent. The rate had earlier hit a high of 3.47 per cent in the November announcement.

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This drew strong investor interest, as the bonds’ coupon rates rose alongside a series of rate hikes by the Federal Reserve.

This year, however, interest in the bonds appears to have waned.

But there may be “further upside” for investors, given the lag effect of the SSBs against the Singapore government bonds, which have continued to rise in the past few months, noted Gerald Wong, founder and chief executive officer of Beansprout, an investment advisory platform.

He expects 10-year yields on the SSBs to continue rising, mirroring that of the government bonds, though it is unclear how long interest rates would continue to rise.