Singapore Savings Bonds oversubscribed for the first time

SINGAPORE — For the first time since they were first issued in Oct 2015, the Singapore Savings Bonds (SSB) have been oversubscribed.

More than 6,300 investors applied for about S$172 million worth of SSB in January, exceeding the issuance size of S$150 million, said the Monetary Authority of Singapore (MAS) on Monday (Jan 29).

As a result, investors who applied for S$41,500 or more of the bonds this month may not be allotted the full amount they applied for. These applicants should receive a refund to their bank accounts one to two days from Jan 29.

Touted as one of the safest forms of investment, the SSB have — until now — not garnered the interest initially expected due to lower returns compared with riskier products.

The Government had planned to issue S$2 billion to S$4 billion of the bonds in 2015, but by Nov 2016, around 35,000 individuals had invested S$970 million.

As of March last year, more than 40,000 individuals hold more than S$1.1 billion of SSB on aggregate, MAS board member Ong Ye Kung had said in Parliament.

The latest figures were not available from the MAS on Monday. The dollar amount of SSB that will be offered this year will be announced by the authority at a later date.

The demand this month could be due to the “relatively high short-term interest rates for this particular issue”, said a spokesperson.

“The first-year (1.55 per cent) and second-year (1.59 per cent) interest rates of (the issue) were the highest since the launch of the programme,” she said.

There is also greater awareness of SSB, which allow subscribers to cash out without a penalty before the 10-year tenure is up.

SSB interest rates are linked to the yields of Singapore Government Securities. As the latter are traded, their yields fluctuate daily based on changes in market conditions, said the MAS.

The SSB on offer in any given month are linked to the daily average Singapore Government Securities yields, as published by MAS, the previous month. SSB interest rates therefore fluctuate according to changes in market conditions, albeit with a lag of a month.

Details of the next issue of the savings bonds will be announced on Thursday (Feb 1).