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Singapore

10-year average return for Singapore Savings Bonds rewrites record high at 3.47%

The December tranche that opens for application on Tuesday (Nov 1) also offers a record first-year interest rate of 3.26 per cent.

SINGAPORE: Returns on the Singapore Savings Bonds hit record highs for the second straight month, with the latest December issue offering a 10-year average return rate of 3.47 per cent.

The first-year interest rate of 3.26 per cent is also the highest ever, beating the record set in the previous issue, according to information from the Monetary Authority of Singapore released on Tuesday (Nov 1) afternoon.

The Singapore Savings Bonds are a type of Singapore Government Securities (SGS), meaning they are issued and fully backed by the Singapore Government.

They were first rolled out in 2015 to provide retail investors with a flexible and risk-free investment option. About 120,000 individuals hold more than S$5.7 billion worth of savings bonds as at the start of 2022.

New tranches of the Singapore Savings Bonds 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.

The interest rates of each 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 highs for returns were set last month when the 10-year average return hit 3.21 per cent and the first-year interest rate touched 3.08 per cent. That issue received applications worth S$2.2 billion, outstripping the S$900 million worth of bonds issued.

Interest rates for the December issue of the Singapore Savings Bond

Year from issue date 1 2 3 4 5 6 7 8 9 10
Interest % 3.26 3.26 3.28 3.58 3.58 3.58 3.58 3.58 3.58 3.58
Average return per year %* 3.26 3.26 3.27 3.34 3.39 3.42 3.44 3.45 3.46 3.47

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

Source: Monetary Authority of Singapore

Applications for the December tranche open at 6pm on Nov 1 and close at 9pm on Nov 25.

Investment amounts for the Singapore Savings Bonds 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.

Successful applicants will receive interest every six months on Dec 1 and Jun 1 until the savings bond matures in December 2032.

Apart from the Singapore Savings Bonds, Singapore’s Treasury bills (T-bills) have also seen rising yields. The latest six-month T-bill reported a cut-off yield of 4.19 per cent per annum, the highest since 1988.

Source: CNA/sk(gr)

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