Singapore Savings Bond’s 10-year average yield increased to 2.81%

Interest rates on the latest issuance of Singapore Savings Bonds (SSB) rose after the November tranche saw yield slide to record lows for 2024.

The last tranche, which opened for application on Friday, November 1 and will be published in December, offers an interest rate of 2.66 percent for the first year and a 10-year average return of 2.81 percent.

This 10-year average yield of 2.81 percent is the highest yield offered since the September issuance.

Interest rates on Singapore government-backed bonds have fallen in the last two tranches. Yields on the November issue fell to 2.56 percent. It received applications worth S$99.6 million for the S$600 million on offer.

The latest issue has a bid of S$600 million and will close on 26 November. The issuance will take place on November 27; Successful applications will be announced on December 2.

SSBs derive their interest rates from the previous month’s average yields on Singapore government bonds. But they are subject to adjustments to ensure that interest rates do not fall over time when the yield curve inverts, that is, when short-term bond yields exceed long-term bond yields.

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The government may make adjustments to ensure that returns do not diminish before SSB matures. well provides investors with an increasing return over their holding period.

The latest tranche of SSBs comes ahead of the Federal Open Market Committee meeting in the US next week.

In September, the Federal Reserve predicted a 50 basis point cut for the remaining two interest rate decisions this year, suggesting either another large cut or two smaller cuts of 25 basis points each.

Economists in a recent Reuters poll all expect the Fed to cut its key interest rate by 25 basis points at the next meeting; More than 90 percent predict the same move in December.