Singapore Savings Bonds S$50,000 individual issue cap removed
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SINGAPORE – The S$50,000 limit per individual for each issue of the Singapore Savings Bonds (SSB) will be removed, said the Monetary Authority of Singapore (MAS).
This comes after the January SSB issue was oversubscribed for the first time since the bonds were first issued in October 2015. More than 6,300 investors applied for about S$172 million worth of bonds, exceeding the issuance size of S$150 million by almost 15 per cent
In a press statement on Thursday (March 1), MAS said: “The removal of the issue limit (which caps the maximum amount of each issue that an individual can hold) will simplify the SSB programme, allowing investors to apply for a larger amount (per issue)”.
But the individual limit, which caps each individual’s total SSB holdings, will remain at S$100,000, it said.
For the latest bonds allotment in March, the bond name SBApr18 on the SSB website showed a 2.31 per cent effective return per year to hold to maturity, the highest yield given for this year. Early redemption in 2019 and the following year are at 1.42 per cent and 1.59 per cent respectively.
This month’s SSB issue will be open for application from 6pm on Thursday. It will end at 9pm on March 26.
For February’s allotment, the interest rate to hold to maturity was at 2.11 per cent return per year.
Interest rate for the oversubscribed bonds issued in January (bond name SBFeb18) was at a 2.04 per cent effective return per year to hold to maturity of 10 years. Early redemption in 2019 and the following year was at 1.55 per cent and 1.57 per cent respectively.
The MAS said in its statement that in the event off oversubscription, each applicant will be allotted S$500 of SSB. The amount will increase in S$500 denominations until each applicant has either received the full amount applied for, or until the available bonds have been allotted, whichever comes first.
“The SSB allocation mechanism will continue to ensure that the bond is distributed as evenly as possible amongst investors. Smaller applications will be filled first in the event of an oversubscription,” it added.
The SSB was launched in 2015 to help retail investors secure higher returns than those offered by banks while giving them the option to invest smaller amounts as well as the flexibility to redeem at any time without incurring a penalty.
More than S$1.9 billion of SSBs have been issued to about 57,000 investors to date.
The value of the first SSB issue in September 2015 was S$1.2 billion. Experts then said the lack of awareness topped with the anaemic economy may not lead to a great take up. About one-third of the bonds were taken up in its debut month.
The MAS subsequently reduced the tranche cap to S$300 million and then further to S$150 million.
The bonds have 10-year tenure period and funds can be redeemed on a monthly basis without penalty. The longer the SSB is held, the higher the return will be. Returns are based on those of conventional Singapore Government Securities (SGS).
Individuals can invest as little as S$500 and in subsequent multiples of S$500, with a total individual limit of S$100,000.
Around half of SSB investors hold amounts less than S$10,000, which reflects the programme’s appeal to small savers, said the MAS.
More than half of the SSB investors are aged 41 and above, with those above 50 applying for the bonds making up 40 per cent.
Approximately S$362 million of SSBs have been issued so far this year. The MAS said it will offer around S$2 billion of SSBs this year and will “continue to monitor the subscription levels closely in determining the monthly issue size”.
