50 and 10 Singapore dollar bills

SINGAPORE: In the latest tranche, the year-to-date high for the 10-year average return on Singapore Savings Bonds (SSB) has soared to 3.33%. This marks a noticeable jump from the previous month’s rate of 3.06% and edges closer to December 2022’s record high of 3.47%.

According to The Business Times, the May tranche of bonds, scheduled for issue in June, is offering a promising first-year interest rate of 3.26%, with the interest rate at the 10-year mark standing at 3.54%. In contrast, April’s issuance was a first-year interest rate of 2.99% and a 10-year mark interest rate of 3.27%.

With an allotment size of a hefty S$1 billion, these bonds are accessible to a wide range of investors, with investment amounts starting at S$500 and issued in multiples of S$500.

Interested parties have a window from 6:00 pm on Thursday, May 2, until 9:00 pm on May 28 to submit their applications. The allocation will take place on May 29, and successful applicants can expect to receive their bonds on June 3.

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SSBs get their interest rates from the average yields of Singapore government bonds from the preceding month. However, these are subject to adjustments to prevent interest rates from declining over time due to inverted yield curves, a situation where short-term bond yields exceed long-term bond yields.

The average return at the 10-year mark has been on a steady incline for four consecutive months, starting from 2.81% in January and reaching 3.06% in April before hitting the 2024 high in Thursday’s announcement.

This surge in yields coincides with the cautious stance of the US Federal Reserve, which appears inclined to maintain higher interest rates for an extended period. Fed chair Jerome Powell said that further rate hikes are “unlikely”, hinting at a policy rate hold until inflation is brought under control. /TISG

Read also: Singapore Savings Bond (SSB) yields rise 3.16% — Time to lock in attractive returns for investors like you

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