MAS has released the latest SSB May 2024 offering: 3.06% for the 10-year average and 2.99% for the first year. Excellent, this rate is a slight step up from last month’s offering! Should we consider this month’s SSB?
SSB May 2024 Offering Details
SSB May 2024 offers slightly better rates than the previous month’s offering. The 10-year average is somewhat higher at 3.06%, up from 3.04%. The first-year rate is 2.99%, slightly higher than the 2.95% from last month. We like this month’s SSB because it offers a decent ~3% rate throughout the entire duration, even starting from the first year.
If you want to apply for this month’s SSB, please do so before 25 April 2024. Also, take note of the following application timeline:
Competitiveness
With the rates hovering around 3% throughout the ten years, this offering has to be one of the better ones, right? Well, let’s find out!
The chart above shows that this SSB May 2024 offers one of the highest rates in recent years. With interest rates expected to reverse later this year, this could be an excellent opportunity to lock in the higher rates for longer, up to ten years!
How About Future SSB Offerings?
SSB rates usually closely track the 10-year Singapore government bond yield. Although it is hard to predict where the yield will go in the next several months, we can still try to estimate by looking at the market’s expectations of where interest rates are heading.
The market expects up to three rate cuts towards the latter half of this year, with the first one starting in June 2024. The Fed has also reiterated that it expects up to three rate cuts this year. What do you think? Do you agree with their assessment?
If you agree with their projections, this SSB May 2024 could be one of the last few chances to lock in those juicy rates for the next ten years.
Swap Older SSBs
We have seen the recent trend of low demand for SSBs. The last time we had a quantity ceiling was back in December 2023. Due to the low demand trend, this month’s offering may not reach the quantity ceiling again. Therefore, this month could be an excellent opportunity to swap older SSBs that yield much lower than 3.06%.
What Would We Do?
We utilize SSB to park our short-term cash. In fact, we have migrated some of our T-bill holdings into SSB to enjoy the extra liquidity while still locking the higher rates for the next ten years. With the flexibility of monthly redemption, while still earning the accrued interest, SSB is a viable option for investors who want to park their short-term cash that does not need to be very liquid.
We have optimized most of our SSB holdings to be above the 3% mark throughout 2022 and 2023 and will, therefore, likely not participate in this month’s offering.
Will you be applying for this month’s SSB? If so, you may follow our step-by-step guide on how to buy SSB.
