How should investors look at Singapore Savings Bonds in 2022?
Endowus Insights

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How should investors look at Singapore Savings Bonds in 2022?

Dec 2022
Jul 2022
Singapore Savings Bonds (SSBs) - returns, investing for income
  • The December issue is offering a record 1-year return of 3.26% p.a. and a record 10-year average return at 3.47% p.a.
  • Investors looking to generate income from investments with a similar redemption flexibility can look beyond SSBs.

The Monetary Authority of Singapore (MAS) has launched the December issue of the Singapore Savings Bonds (SSBs), offering a record 1-year return of 3.26% per annum (p.a.).

The December tranche also offers a record 10-year average return — though one that is not dramatically higher than the 1-year return — at 3.47% p.a.

Using the August and September SSB tranches in 2022 as case studies, we explain why SSB rates are generally been on the rise, why demand is growing for such instruments, and how you should look at the investment option of SSBs.

Demand for the August 2022 tranche of the SSBs spiked to a high then, as its attractive 10-year average return of 3% caught the eye of individual investors. It was the first time in 2022 that the 10-year average return hit 3% p.a.

SSB case studies: August and September 2022

SSBs feature a step-up function, meaning that the interest increases over time — the longer you save, the higher your return. 

That said, for the September 2022 tranche, the coupon rate stepped up from year 1's 2.63% p.a. but then stayed unchanged starting from year 2 to year 5 at 2.71% p.a. The rate then gradually would rise each year to 3.04% p.a. in year 10.

The August 2022 SSB would pay out a coupon rate of 2% p.a. in year 1, followed by 2.86% p.a. in year 2, 3.07% p.a in year 3, and would eventually step up to 3.29% p.a. in year 10.

If you hold it till it matures in August 2032, the average return over the decade would stand at 3% p.a. per year. This is 0.29 percentage points higher than the 10-year average return of the July 2022 issuance at 2.71% p.a.

The average return will be lower if you exit the investment before maturity. For instance, it will stand at 2.82% per year if the August 2022 savings bond is redeemed at the end of year 5. That said, this is still above the July 2022 bond’s average return of 2.54% p.a. if redeemed in year 5.

The maximum amount offered for the August 2022 SSB is $700 million, which is 16.7% larger than the July 2022 SSB’s issuance size of $600 million.

Demand was greater for this tranche than in the previous issue, with the bigger coupons driven by upcoming Fed rate hikes enticing more investors.

SSBs have 10-year tenors and are fully backed by the Singapore government. New tranches are issued every month, and each savings bond’s interest rates are fixed and locked in for the entire 10-year term. The interest, also known as coupons, is paid out to investors every 6 months.

Investors applied for some $2.45 billion worth of SSBs in the August 2022 issuance.

In contrast, SSB applications averaged around $29.7 million per month in 2021, about $30.7 million per month in 2020, and $234.6 million per month in 2019.

Just $700 million was available under the August tranche, but the applications ended up more than triple that amount. Given that demand significantly exceeded supply, how was the allocation done for this record-breaking round? 

MAS set the quantity ceiling for this tranche at $9,000. That means that those who applied to buy $9,000 or less of the bond were fully allotted their application amounts. The minimum you can invest in SSBs is $500 — and this can increase in multiples of $500 — but the total amount of such bonds you can hold at any one time cannot exceed $200,000.

Meanwhile, those who wanted to buy $9,500 or more of the August SSB were allotted either $9,000 or $9,500. About 8.15% of these applicants were selected at random and allotted that additional $500, MAS said.

Previously, for July tranche, total applications were more than double the issuance size of $600 million. The quantity ceiling for that tranche was set at $18,000.

Read more: What should I do with my cash now?

Why are SSB rates moving the way they do?

Each SSB issue’s interest rates are based on the average Singapore Government Securities (SGS) yields the month before applications open.

If you hold your savings bond for the full 10 years, your return will match the average 10-year SGS yield the month before you bought the bond. The 10-year SGS yield has hovered between 2% and 3% for most of the past decade.

Domestic interest rates in Singapore tend to track global rates, especially those in the United States.

To rein in high inflation, the US Federal Reserve has been raising the benchmark interest rate aggressively of late; the country’s official rate went up by 0.5 percentage point in early May 2022, which marked the biggest increase since 2000.

This was followed by a 0.75 percentage-point rise on 15 June 2022, which was the Fed’s largest interest rate hike since 1994. A further rapid increase is expected when the US central bank’s policy makers next meet on 26-27 July 2022.

In Singapore, economists are now also predicting interest rates to rise more quickly than before. A quarterly survey of professional forecasters released by MAS on 8 June 2022 showed that the private-sector analysts foresee the 3-month Sibor (Singapore Interbank Offered Rate) reaching 2.3% by the end of 2022, up from their previous 1.09% forecast. 

As this chart shows, the short-term rates in year 1 and year 2 have particularly steepened, reflecting the impact of the recent rate hikes in quick succession. But the mid to long-term rates are fairly flat or are gently rising, which reflects uncertainty over long-term economic growth.

That said, in the US, long-term interest rates are falling below short-term rates — this is known as a yield inversion, which we explain more on here

With Singapore being a price-taker of US rates, the September SSB tranche offered a 10-year average return of 2.8% p.a., lower than August's 3%.

The 10-year average return for both the November and December tranches have, however, since crossed 3%.

To learn more about the Endowus Income Portfolios, read more from this link.

What’s fuelling demand for instruments such as SSBs?

Typically, when economic sentiment slumps and equities underperform, investors tend to look to certain low-risk, fixed-income assets such as government bonds. It comes amid a flight to quality, while staying diversified in investments.

SSBs, in particular, are considered safe investments as they are backed by the Singapore government, which means investors can always get their investment sum back in full with no capital loss, and all coupon payments will be paid regularly and on schedule.

The rising interest rates and inflationary pressures have also made it more likely for investors to sell their lower-yielding assets — which may include existing bonds that were issued and bought when rates were low — to purchase newly issued bonds offering higher coupons. 

Also attractive are flexibility and high liquidity. When it comes to SSBs, you can redeem it in any month with no lock-in penalty for exiting your investment early. This means you can also exit out of lower-yield SSB tranches easily for an application fee of $2 per redemption request.

The amount issued for each SSB has been growing since the November 2021 tranche, which was sized at about $29.7 million, up from $21.2 million in the previous month.

How should you allocate your investments in SSBs?

At Endowus, we advocate staying invested for the long term, and staying globally diversified in both equities and bonds. Specifically with fixed income, that means diversifying among different bonds and income-generating instruments, especially in a market downturn. 

For example, investment grade bonds issued by top blue-chip companies have a higher coupon than Treasury bills (T-bills), and are much less likely to default than those from companies with poorer financial health that issue high-yield bonds. Having a diversified mix of bonds — so long as that meets your risk appetite — can bring stronger income streams. 

Yet, purchasing corporate bonds issued by blue-chip companies requires a much heftier investment in the order of hundreds of thousands of dollars. So to reap additional diversification benefits, an easier approach might be to invest in bond funds. Bond funds sold as unit trusts give investors exposure to different sub-asset classes such as sovereign debt, corporate debt, and mortgages. Investing in a globally diversified bond fund also means that the risk of changing interest rates in one country or region would be mitigated by exposure to other countries experiencing a different phase of the economic cycle.

Investors looking to generate income from investment options that have a similar redemption flexibility can look beyond SSBs. For example, Endowus offers Income Portfolios that are invested in unit trusts with no lock-in and no transaction costs. This allows you to easily liquidate your portfolios, should you change your mind. These investment portfolios naturally come with investment risk.

Investment product Risk Annual payout/interest
Singapore Savings Bond:
August 2022 issuance
Very low risk 3.0%^
Endowus Stable Income Portfolio Low risk 4.0% to 5.0%*
Endowus Higher Income Portfolio Moderate risk 5.0% to 6.0%*

*Current payout target, estimated capital appreciation and estimated total return are not guaranteed and are estimates only. Your principal invested amount may or may not be returned in full. These targets and estimates are subject to market movements and fund manager’s decisions that are outside the control of Endowus and therefore may not be realised in the future.
^Average per-annum return over 10 years.

SSBs may prompt a comparison to our Cash Smart Portfolios. Whether or not the Cash Smart Portfolios are worth investing must first of all depend on the investor's risk tolerance. If the investor is comfortable with taking the additional risk for the prospect of gains, then the Cash Smart Portfolios might be an option.

We also provide these general observations:

  • The interest rates of SSBs are locked into a fixed schedule, which may prove to become less attractive as we go into a rising rate environment.
  • An investor will have to buy and sell SSBs themselves, and work within a cap of $200,000 for SSB investment per investor. Should the interest rates in the next subsequent months rise, investors will face the hassle of repeating the process, while risking the chance of not obtaining an allotment due to oversubscription. Cash Smart portfolios are actively managed by the underlying fund managers, thus saving you from such trouble.
  • Investing in SSBs introduces concentration risk to your investments. Investing in a Cash Smart portfolio means your money is invested in multiple issuers and entities across various sovereigns and corporates, allowing you to benefit from diversification.
  • The underlying fund managers of Cash Smart portfolios also invest in Singapore government-issued bonds, which are often institutional tickets that could offer better returns than the SSBs. MAS bills are common underlying securities. By investing in Cash Smart, you also gain exposure to “institutional-level” SSBs.

Finally, an investor may also consider investing in both products to optimise his or her capital. The beauty of investing lies in deploying your capital to the most appropriate products based on the objectives and risk tolerance, and we encourage investors to always consider their investments in a holistic manner.

To learn more about bonds, please read our primer here. To learn more about the Endowus Income Portfolios, follow this link or get started here. To find out about our Cash Smart Portfolios, click here.


Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund. 

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

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