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Singapore Savings Bonds 10-year average return hits record high of 3.21%

SINGAPORE: The 10-year average return for the November issue of the Singapore Savings Bonds has hit 3.21 per cent, a record high since the instrument was first launched in 2015.

The first-year interest rate, at 3.08 per cent, is also the highest ever, based on information from the Monetary Authority of Singapore on Monday (Oct 3).

The Singapore Savings Bonds are a type of Singapore Government Securities (SGS), issued and fully backed by the Singapore Government. They were launched in 2015 to provide retail investors with a flexible and risk-free investment option.

New tranches are released at the start of each month, with fixed interest rates that step up for each year they are held and locked in for 10 years.

Interest rates for the November issue of the Singapore Savings Bond

Year from issue date 1 2 3 4 5 6 7 8 9 10
Interest % 3.08 3.15 3.18 3.19 3.21 3.23 3.25 3.26 3.28 3.30
Average return per year %* 3.08 3.11 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21

*Calculated at the end of each year on a compounded basis

Source: Monetary Authority of Singapore

Amid rising return rates, the Singapore Savings Bonds have been receiving keen interest from investors in search of safety amid volatile times. The bond's latest average 10-year return surpasses the interest rates offered by banks on fixed deposits, which have also been on the rise amid a rising rate environment.

The interest rates of each Singapore Savings Bond issuance are based on the average SGS yields in the month before applications open. These yields have been on an uptrend like all other major economies’ bond yields, as global central banks raise interest rates.

The previous record for the 10-year average return was set in August, when the return rate touched 3 per cent. That issue received applications worth S$2.4 billion, far outstripping the S$700 million worth of bonds issued.

As a result, the quantity ceiling - applied when applications exceed the issuance size - for the August tranche was S$9,000, much lower than earlier issuances.

For this latest tranche which will be issued on Nov 1, the maximum amount offered is S$900 million, according to MAS’ website where issue details are made known monthly.

Interest will be paid every six months on Nov 1 and May 1 until the savings bond matures in 2032.

Applications for the November tranche will open at 6pm on Monday and close at 9pm on Oct 26. 

Investment amounts start from S$500 and can be made via cash or one's Supplementary Retirement Scheme funds. A S$2 transaction fee applies for each application.

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Source: CNA/sk(rj)


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