Singapore Government Bonds: SSB vs. SGS vs. T-Bills

Singapore Government Bonds

With the recent increase in interest rates, government bonds have become one of the favorite investments among investors. We break down the different Singapore government bonds so you can decide which suits your portfolio best.

Singapore Savings Bonds (SSB)

SSB is a special type of Singapore Government Securities issued and backed by the Singapore government. SSB has a tenor of 10 years, with the interest rate increasing yearly. Like a regular bond, investing in SSB guarantees your initial principal and the interest payout.

The unique feature of SSB is its flexibility to redeem at any month[1] without penalty. You even receive the accrued interest upon withdrawal. [1]You will receive the requested amount and the accrued interest by the second business day of the following month.

SSB has a low minimum investment of $500, but it has a maximum total investment cap of $200,000 per individual.

A new Savings Bond will be issued monthly according to the issuance calendar provided by MAS.

Singapore Savings Bonds Step-Up Interest Rates
Example of SSB step-up interest rates over the ten years duration

 

Key features of SSB

SSB low risk - Singapore Government Bonds Low Risk

Fully backed by the Singapore Government with an AAA credit rating. Your initial principal and interest are guaranteed.

SSB long term - Singapore Government Bonds Long-term

Invest for up to 10 years with interest that increases over time. Interest rates for the whole ten years are locked in at the start.

SSB flexible Liquid

You can exit your investment in any given month with no penalties. You even receive the accrued interest.

 

Term 10 years
Minimum investment Minimum $500, in multiples of $500
Maximum investment Maximum total holding of $200,000 overall
Availability Cash, SRS
Interest payout Every six months
Redemption Every month ($2 admin fee)

Processed by the second business day of the following month.

Secondary market trading No (you can redeem every month without penalty)
Interest rate “Steps up” yearly.

At issuance, interest rates for the entire 10-year term are locked in.

Ideal for Money that needs to be semi-liquid. This could be the money you expect to use in the short to medium term. Remember, there is a lead time of up to 1 month for redemption.

 

To get the latest SSB offering, check the MAS page here. If you are interested in applying for SSB, you can follow our step-by-step guide on how to buy SSB. To redeem, we also have a step-by-step guide on how to redeem SSB.

 

SGS Bonds

Medium to long-term Singapore government bonds issued and backed by the Singapore government, which has the highest credit rating of AAA given by major rating agencies. SGS Bonds pay a fixed interest rate and have maturities between 2 to 50 years.

There are three categories of SGD Bonds:

  • SGS Market Development (To develop the domestic debt market)
  • SGS Infrastructure (To finance major, long-term infrastructure)
  • Green SGS Infrastructure (To finance major, long-term green infrastructure projects)

SGS Bonds have fixed maturity dates, meaning investors cannot redeem before maturity. There is liquidity risk here. Investors can still trade these bonds on the secondary market but are subject to fluctuations in market pricing. When interest rate rises, it usually negatively impacts bond prices and vice versa. Investors may incur losses when selling before maturity. It is generally recommended that retail investors hold these SGS Bonds until maturity to receive the guaranteed principal and interest.

SGS Bonds are offered monthly following the issuance calendar.

 

Term 2, 5, 10, 15, 20, 30, or 50 years
Minimum investment Minimum $1,000, in multiples of $1,000
Maximum investment Up to the allotment limit for each auction
Availability Cash, SRS, CPF
Interest payout Every six months starting from the month of the issue
Redemption No early redemption
Secondary market trading Yes
Ideal for Money that you won’t need for the duration of the bond.

 

You can find the latest SGS Bonds from the MAS website here.

 

T-Bills

T-Bills are short-term 6-month or 1-year government securities issued and backed by the Singapore government. Singapore government has the highest AAA credit rating assigned by major rating agencies. Your principal and interest are guaranteed.

When buying T-Bills, investors pay a discount to the face value of the bills and, at maturity, receive the full face value of the bills. The discount is the investors’ profit.

For investors who want to park their cash in the short term, T-Bills is an ideal place as they provide a competitive return with a low-risk profile. Investors are also eligible to use their CPF to invest in T-Bills. Recently, the T-Bills rate has been much higher than the CPF-OA rate; thus, the viability of CPF investment into T-Bills.

T-Bills have a fixed maturity date, meaning investors lock their capital for the whole duration. There is no early redemption option. T-Bills are tradeable in the secondary market but are subject to market price fluctuation. You risk losing your initial capital if you sell early in the secondary market.

 

Term 6-month or 1-year
Minimum investment Minimum $1,000, in multiples of $1,000
Maximum investment Up to the allotment limit for each auction
Availability Cash, SRS, CPF
Interest payout Paid upfront

You pay the bills at a discount and receive the full face value at maturity.

Redemption No early redemption
Secondary market trading Yes
Ideal for The money (including CPF money) you won’t use in the next six months (or one year, depending on the maturity).

 

You can check the MAS page here to get the latest T-Bills offering. If you are interested in applying for T-bills, you can follow our step-by-step guide on how to buy T-bills.

 

Summary of the Singapore Government Bonds

Singapore Savings Bonds (SSB) SGS Bonds T-Bills
Tenor 10 years 2, 5, 10, 15, 20, 30, or 50 years 6-months or 1-year
Minimum investment $500 $1,000 $1,000
Maximum investment $200,000 (in total) No No
Availability Cash, SRS Cash, SRS, CPF Cash, SRS, CPF
Interest Payout Every six months Every six months Paid upfront in the form of a discount to the face value.
Interest Type Steps up yearly, but the amount is fixed at issuance. Fixed Fixed
Redemption Every month Only at maturity Only at maturity
Secondary market trading No Yes Yes

 

What are the disadvantages?

As safe as it sounds, the Singapore Government Bonds typically have similar drawbacks as the other fixed-income investments. The main disadvantage of these investments is that they usually do not beat inflation over the long term. You can read our article about fixed-income investments to learn how they may fit into your portfolio.

That said, at the time of this writing, the interest rate for these instruments has been one of the highest in recent years.

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Disclaimer: The information provided here is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice or recommendation of any sort.

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David Ang

About David Ang

A long-term investor with a portfolio across the United States and Asian equities, REITs, commodities, and fixed incomes. After over a decade of hands-on investing (and making countless mistakes), I'm excited to use this platform to share what I've learned over the years. And let's continue to learn together. Writing about macro economy, equities, personal finance, web3. Follow me on Twitter: @danggaku