Singapore Savings Bond February 2023 – Returns Decline Again; 2.84% to 2.97% P.a.

Another month, another Singapore Savings Bond (SSB). Following January 2023’s dip in rates, the February 2023 SSB continues to decline in the average returns given. Its 1-year return stands at 2.84% while a full 10-year tenure averages 2.97% p.a.

Possibly in anticipation of a lower demand, the amount offered is also reduced to S$700 million.

Year from issue date	1	2	3	4	5	6	7	8	9	10
Interest %	2.84	2.84	2.84	2.84	2.84	2.84	2.98	3.20	3.33	3.33
Average return per year %*	2.84	2.84	2.84	2.84	2.84	2.84	2.86	2.90	2.94	2.97

Past SSBs compared

Year From Issue Date	1	2	3	4	5	6	7	8	9	10
June 2023	2.81	2.81	2.81	2.81	2.81	2.81	2.81	2.81	2.81	2.81
July 2023	2.76	2.76	2.76	2.76	2.76	2.76	2.76	2.78	2.81	2.82
August 2023	2.97	2.97	2.97	2.97	2.97	2.97	2.97	2.98	2.98	2.99

End of oversubscription?

Last month’s SSB was not very popular relative to the severity of oversubscription since mid of 2022 and only 101% of the S$900 million tranche offered was subscribed. Contrary to the limited amounts one could subscribe in previous months, the ceiling amount was S$173,000 – a very high figure considering how each person can only have S$200,000 in total across all SSBs.

The tranche size this month is smaller at S$700 million, but it seems likely that the recent trend of oversubscription would subside. Given the muted response to last month’s SSB and this month’s lowered rates, it would not be surprising if this tranche is not oversubscribed at all.

As such, you could probably get S$100,000 to S$150,000 allotted, if you so desire.

Inverted yield curve

For bonds of similar risk, longer tenures tend to give higher returns. An inverted yield curve happens when short-term bonds offer higher returns than longer term ones. Such occurrences are relatively rare and tend to predict upcoming recessions. This has been happening for a while now with t-bills offering higher returns than SGS bonds and SSBs with longer tenures in the past few months. Of course, many signs already point to an upcoming recession, and I intend to explore this topic in greater detail as well as what one can do to prepare for economic downturns, so stay subscribed to my Telegram for more.

People with funds now are also caught between getting the higher interest rates in the short term versus placing them into SSBs, incurring some opportunity costs in the short term but getting a 10-year tenure for around 3% p.a. interest. I wrote briefly on the topic in this post.

Application timeline

Note that applying early does not confer you any priority in the allotment process, so it is more ideal to apply nearer to the closing date. This is because your funds are deducted from your account at the point of application, and you do not get any interest for such funds.

Opening Date	Closing Date	Allotment	Issuance
1st business day of month (6PM)	4th last business day of the month (9PM)	3rd last business day of the month (after 3PM)	1st business day of the following month (end of day)
3rd January 2023 (6PM)	26th January 2023 (9PM)	27th January 2023 (after 3PM)	1st February 2023 (by end of day)

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