Singapore Savings Bonds 10-year average return hits 2.71%, highest since 2015

SINGAPORE (THE BUSINESS TIMES) – The average return over 10 years for the July issue of the Singapore Savings Bonds (SSB) soared to 2.71 per cent, just a few basis points short of its last peak in November 2015.

The first-year interest rate for the SSB stands at 1.69 per cent, while its 10-year interest rate was offered at 3 per cent.

The higher interest rates reflect the tightening economic environment in recent times, coupled with expectations of further rate hikes from the United States Federal Reserve after it raised benchmark interest rates three-quarters of a percentage point – representative of its most aggressive hike since 1994. Published forecasts also showed that most Fed policymakers expect rates would rise to 3.4 per cent by the end of the year.

The maximum amount offered in the upcoming issue of SSBs is capped at $600 million. The first interest payment will be made on Jan 1, and subsequently pay out every six months on July 1 and Jan 1 until maturity.

Applications for the last round of bonds issued in June totaled $916.5 million, though only $350 million was allotted. The first-year interest rate for June was 1.43 per cent and the 10-year interest rate was at 2.71 per cent. The average return over 10 years was valued at 2.53 per cent per annum.

Applications for the July issue of SSBs closed on Monday.

Data released by the Monetary Authority of Singapore on Tuesday afternoon showed that applications for the round of issuance rounded to just over $1.3 billion, a record high since the fixed income instrument was launched in 2015.