Singapore Savings Bond SSB Dec 2023: 10-Year Average of 3.40%. Wow!

SSB Dec 2023

Christmas present comes early: MAS has released the latest Singapore Savings Bond SSB Dec 2023. The interest rates are 3.40% for the 10-year average and 3.30% for the first year. Woah, this is excellent news for Singaporean savers. We are back to the level seen in December 2022. Should we consider adding SSB to our portfolio?


Key Takeaways

  • SSB Dec 2023 offers a 10-year average yield of 3.40% and a first-year yield of 3.30%. This is the highest level we have seen this year and one of the highest in recent years.
  • With the interest rate expected to peak soon, this month is your chance to lock in the high rate for the next ten years! You can also use this opportunity to recycle older SSBs that yield much lower than the current offering.


SSB Dec 2023 Offering

SSB DEC 2023

We like this SSB Dec 2023 offering as the rates are attractive for both the first year and the 10-year average. This is a decent step up from last month’s offering of ‘only’ 3.32%. At a 10-year average of 3.40%, we are hovering at the upper range of the levels we have seen since late last year. In fact, this is one of the highest levels in recent years. We have seen the global interest rates continue to climb recently, and the higher rates in this latest offering are not surprising.

If you are interested in this SSB offering, please apply before 27 November 2023. Do take note of the following application timeline:

SSB Dec 2023 application timeline

You may submit your application using any local bank’s online banking platform and follow our step-by-step guide on how to buy SSB.


How Competitive Is This SSB Dec 2023?

As mentioned above, the current rate is attractive because it is one of the highest in recent years. Let’s examine the data to confirm this assessment.

Current vs. Historical Rates

SSB Interest Rate History - Dec 2023
Source: SSB Interest Rates History

From the chart above, it’s clear that this SSB Dec 2023 is at one of the highest levels in recent years. It is just slightly lower than the level we saw in December 2022. If we look at the offering two years ago, the rates were still well below the 2% mark. So what do you think? We think the current offering is very competitive if we compare historically.

Future Interest Rate Projection

With interest rates continuing to climb in the past six months, the upcoming offerings may offer even higher rates, right? Nobody knows for sure. Regardless, it is probably not wise to time the peak of the interest rate, as many factors beyond our control could affect it. Instead, we can look at future projections to see whether or not we are already nearing the peak.

Future interest rate expectations
Source: CME Group

The table above lists the market expectations of where the US benchmark interest rates will be around that date. As we can see, the market expects the interest rate to have peaked at this level, and the Fed will start to pivot towards the latter half of next year. The market expects the end-of-year interest rate to be around 75bps below the current level.

If the market expects the interest rate to have peaked, how about the Fed themselves? The decision on the interest rate direction will ultimately be theirs. From their last FOMC meeting, they expect one additional rate hike before pivoting back down towards the latter half of next year.

Both the market and the Fed agree on where the interest rate is heading going forward. Do you agree with their assessment? If so, this month’s SSB Dec 2023 offering can be your opportunity to lock in the higher rates for the next ten years!


Who Is SSB For?

We think SSB’s appeal is its flexibility. SSB is a long-term 10-year government bond, but it allows us to redeem at any month (partially or in full) without penalty and even earn the accrued interest. Because this is a Singapore government bond, your principal and interest are guaranteed by the credit of the Singapore government. Therefore, SSB has one of the lowest risk profiles among all instruments.

SSB typically suits investors with the lowest risk profile who seek capital preservation. If you are one of those with the lowest risk profile who value liquidity, you may consider investing in SSB.

SSB is also suitable for parking short-term cash that is not urgent in nature. Note that there is a redemption lead time of up to one month. So, please do not put your emergency cash into SSB. As the name implies, emergency cash should be accessible 24/7.


What Would We Do?

We love this month’s SSB Dec 2023 offering. The interest rates for both the first year and the 10-year average are very attractive as they are hovering at the highest levels in recent years.

Recycling Older SSBs

We have already reached our desired SSB allocations, but because this month’s offering is quite attractive, we want to recycle some of our older SSBs with lower yields into this month’s offering. This month’s offering of $1 billion is relatively higher than previous offerings, making it a decent opportunity to recycle previous SSBs.

However, note that due to high demand, last month’s offering had a quantity ceiling of $47,500. With this SSB Dec 2023 offering also being very competitive, we expect the demand to stay high. As such, we may need to be conservative with our application to account for the possible quantity ceiling.

Inverted Yield Curve and Locking In Higher Rates

We want to highlight that the current yield curve is inverted, meaning that shorter-term interest rates are higher than longer-term rates. For example, the interest rate on short-term government bonds, such as 6-month T-bills, is much higher, with the last auction yielding 3.95%.

Because we primarily utilize SSB for our short-term cash needs, we use both T-bills and SSB to park our short-term cash. By adding T-bills into the mix, we can enjoy the higher short-term interest rate while locking the longer-term interest rate with SSB.

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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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