Up to S$2b S’pore Savings Bonds on offer next year

SINGAPORE — Up to S$2 billion of Singapore Savings Bonds (SSBs) will be offered next year, said the Monetary Authority of Singapore (MAS) yesterday, half of the S$4 billion upper limit this year amid weak demand for the investment type, although analysts say investor interest may pick up as yields rise.

“We have revised the issuance size for 2017, taking into account the subscription amounts in 2016,” said an MAS spokesperson, noting that total SSBs issued for this year amounted to S$276 million. She said the MAS is encouraged by the take-up thus far. Since the launch of the programme in Sept 2015, 35,000 individuals have invested S$987 million into 15 SSB issues, she said.

SSBs are a low-entry, risk-free investment vehicle to help Singaporeans meet their long-term financial goals and to save for retirement. Interest rates increase the longer the investment is kept, and individuals can choose to cash out before the 10-year tenure is up without suffering any penalty.

Despite these attractive features, they have not garnered the expected level of interest due to low rates and the lower returns, compared with those for riskier products.

UOB economist Francis Tan said: “As seen by a cut of 50 per cent of bonds offered for next year compared to this year, the take-up rate has not been strong. This is due to lower interest rates offered to retail investors. The interest rates rose at the start of the year and then fell again as the hype on interest rate normalisation by the US has fallen.

“However, there is the question if next year’s cut on offerings could be behind the curve, as there is talk on a pricing of higher interest rates for 2017, due to US President-elect Donald Trump’s talk on fiscal stimulus that may push the yields to higher-than-average levels. We may see more people looking at SSBs.”

Applications for the first SSB for next year — to be issued on Jan 3 — are open from now until 9pm on Dec 27, with up to S$150 million available.

If held to maturity, the January SSB will give the highest returns since March. For example, if an investor buys S$10,000 of the issue and holds it to maturity, he or she will earn total interest of S$2,228, the highest since March’s S$2,493. Angela Teng