DEMAND for the latest tranche of the Singapore Savings Bonds (SSBs) has reached a year-to-date high, with its 10-year average return having hit a new peak for the year thus far, the allotment results released on Wednesday (May 29) indicated.
The June issuance pulled in S$1.6 billion in applications, exceeding the S$1 billion on offer. S$1.6 billion was applied within individual allotment limits.
This issuance is offering the highest 10-year average return since December 2023. In this tranche, the first-year interest rate stands at 3.26 per cent, and the 10-year average return, at 3.33 per cent.
The December 2023 tranche offered a first-year interest rate of 3.3 per cent, and a 10-year average return of 3.4 per cent.
In the first half of 2024, demand for the SSBs fell as yields fell below 3 per cent, in line with rate-cut expectations.
But yields have risen again, amid the possibility that the US Federal Reserve would leave interest rates higher for longer.
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Earlier in May, Fed chair Jerome Powell said that further rate hikes remained “unlikely”, and suggested that the benchmark policy rate would be held until inflation was under control.
SSBs take their interest rates from the average yields of Singapore government bonds from the month before.
They are, however, subject to adjustments to ensure that interest rates do not dip over time for inverted yield curves, in which the yields of short-dated bills exceed those of longer-dated bonds.
The latest tranche of SSBs were offered and allotted through the quantity-ceiling format.
Applicants who applied for S$24,000 or lower were fully allotted.
Those who applied for sums higher than this were allotted either S$24,000 or S$24,500; around 51 per cent of these applicants were picked at random and allotted the additional S$500.
The SSBs, which closed on May 28, will be issued on Jun 3.
