Learn 3 Things About Singapore Savings Bonds Before Applying For The December 2023 Issue – Beragampengetahuan

The latest news in the Singapore personal finance community is the extremely juicy yield offered by the upcoming issue of the Singapore Savings Bonds (SSB) which offers investors safe and appealing returns for their cash funds. Let’s have a quick look at the SSBs’ history and the interesting findings we will uncover.

Ever since the Singapore Savings Bonds first-year returns breached 3.08% in November 2022, the first-year returns have continued to hover in the 2.76% (March 2023) to the 3.30% (December 2023) range.

For easy reference, check out my Singapore Savings Bonds page, which has the full history of the interest rates for all issues of SSBs.

1a. Top 3 SSBs With The Highest First-Year Interest

Below are the three issues of SSBs with the highest first-year interest, and all of them were issues in the last 12 months.

One good thing as a result of the high interest rate environment was high-yielding SSBs.

Unsurprisingly, both the November 2023 (1.2x) and December 2022 (1.7x) issues of SSBs were oversubscribed.

The November 2023 issue saw a quantity ceiling of $47,500, whereas the December 2022 issue saw an allotment of $14,000.

To avoid any confusion, the December 2023 issue of SSB has been announced, but the results won’t be out until the end of the month since it is currently open for application.

1b. Top 3 SSBs With The Highest Average 10 Years Returns

Now, let’s take a longer-term view of SSBs.

Below are the three issues of SSBs with the highest 10-year returns, and once again, all of them (the exact same 3) were issues in the last 12 months.

To me, they represent extremely attractive rates that we can lock in for the next ten years.

2. SSBs With Rates More Than 3% Experienced Low Redemptions

We all know from common sense that higher-yielding SSBs would obviously see a lower rate of redemption.

What is the actual data looking like as of November 2023?

I have filtered all the issues of Singapore Savings Bonds with either first-year interest or average 10-year returns that exceed 3%.

The data showed a little surprise in the sense that all of them indicated a redemption rate of a maximum of 17% – most of the holders are still holding!

That is a lot more resilience than I expected, to be honest.

Moving forward, I would expect the numbers to continue showing the same resilience.

SSB issues with a yield that is lower than 3% have seen significantly more redemptions.

It appears to me that the 3% baseline could have an important psychological significance when it comes to deciding whether to redeem the lower-yielding SSBs.

3. Underscribed Issues Could Hide Underlying Demand?

From September 2022 to January 2023, these five months were huge issues whereby the amount offered was all S$900 million, with the exception of December 2022, which peaked at $1 billion.

Even then, all five months were oversubscribed back then.

After that, fatigue probably set in, and all SSB issues were either $600 million or $700 million.

But the trend has now changed again in the upwards direction in terms of issue size.

• October 2023 = $800 million (under-subscribed)
• November 2023 = $1 billion (over-subscribed)
• December 2023 = $1 billion (likely over-subscribed)

Even though October 2023 was undersubscribed, it was for an upsized issue of $800 million.

For the upcoming December 2023 issue, it was maintained at the size of $1 billion.

Seeing how the November 2023 issue was oversubscribed, and the December 2023 issue is giving even higher returns, this means one thing.

We can be certain that December 2023 will see an oversubscription, and the quantity ceiling could be really low.

You will have to decide how much you want to apply for.

As for myself, I am going for $10,000.

What Would I Do With My SSBs?

To recap, the December 2023 issue has the highest First Year Interest and second highest Average 10 Years Returns in the history of SSBs.

This upcoming issue of SSB is going to be one of those really rare chances to lock in an annual return of 3.3% for ten years in what would be a risk-free instrument.

Looks like it is going to be yet another significant vampire attack on older issues of SSBs because locking in such a high yield for ten years is insanely attractive.

I will be swapping older, lower-yielding issues of SSB for this December 2023 issue, but be careful not to be too greedy.

It is extremely easy to do so, and all I have to do is to pay $2 for redemption and pay $2 for application.

The only thing to be mindful of is that if we are applying for a huge amount and the issue of SSB happens to be oversubscribed, then we may not be able to be successfully allocated for the full amount that we apply for.

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Kevin started beragampengetahuan when his net worth languished at negative $25,755. His desire to turn things around led him to build passive income from investments and side hustles that pay for his daily expenses and vacations. You can learn more about Kevin here.