The latest offering for SSB Feb 2024 (GX24020T) has been released, and as expected, the rate dropped to 2.81% for the 10-year average and 2.72% for the first year. The rates will likely disappoint many investors who have been used to the above 3% mark in 2023. Is this month’s SSB offering still attractive enough with the falling rates?
SSB Feb 2024 Details
This SSB Feb 2024 offers a first-year return of 2.72% and a 10-year average of 2.81%. The 10-year average is down sharply from 3.07% in the previous month. The lower rates were expected because of the declining global rates after the market expected the Fed to have reached the peak of its rate hike cycle.
Are you interested in applying for this SSB Feb 2024 offering? Please take note of the following application timeline and apply before the closing date on 26 Jan 2024, 9pm.
Competitiveness
With such a fall in the interest rates offered, this SSB Feb 2024 may look less appealing to investors who have been used to the high rates in 2023. However, for those who have not yet locked in rates, this month’s offering is still relatively high compared to what we have seen in 2021 and early 2022.
Despite the steep decline, we can see that this month’s SSB still offers relatively competitive rates if we compare them historically. While many investors may have locked in throughout 2023, those who haven’t will have the opportunity to do so this month before the expected interest rate reversal in the future.
Future Rates Expectation
Because SSB is a long-term, ten-year government bond, the rates it offers track closely with the long-term interest rates. So, the question is, where will the interest rate go?
From its last FOMC meeting, the Fed has hinted that they may have reached the peak of the current rate hike cycle and projected three rate cuts this year.
The market projected an even more aggressive rate cut up to six times.
The Fed and the market projected that we may have reached the tail end of this rate hike cycle. If you agree with them, the current SSB offering, though lower in rates, can be your chance to lock in relatively higher rates for the next ten years.
Who Is SSB For?
Singapore Savings Bond (SSB) suits investors who want to preserve their capital while earning guaranteed stable returns. Because SSB is a long-term government bond, investors can get a stable, guaranteed payout for the next ten years.
However, many investors also utilize SSB to park their short to medium-term money because SSB allows monthly redemption without penalty. You even earn the accrued interest. SSB offers investors a way to lock in interest rates for longer while still providing liquidity should the need arise. And this is also what we have been doing recently. We have started shifting some of our short/medium-term cash into SSB to lock in the higher rates for longer. With the interest rates projected to reverse this year, it would be great if we could enjoy the current higher rates for a bit longer 🙂
What Would We Do?
Despite the rate drop, we think this SSB Feb 2024 still offers relatively decent rates. For investors who still need to fill in their desired SSB allocation, this month can be your chance to lock in the higher rates for the next ten years.
As for us, we have optimized our SSB allocation throughout 2023 and, therefore, will likely not be participating this month. We use a mix of SSB and T-bill to park our short- and medium-term cash and have migrated a decent portion of our T-bills into SSB to lock in the higher rates for longer.
Will you be applying for this month’s SSB? You may follow our step-by-step guide on how to buy SSB.
