THE latest Singapore Savings Bond (SSB) allotted on Monday (Jan 27) saw a fall in applications to less than half of the amount offered, as the 10-year average return slipped from the earlier tranche.
The February tranche of the Singapore government-backed bonds received a total of S$236.5 million in applications for the S$500 million that was offered. A total of S$223.1 million were applied within individual allotment limits, and this amount was fully allotted.
In comparison, the January issuance received S$326.3 million in applications for the S$600 million on offer.
The latest tranche offered a first-year interest rate of 2.76 per cent, slightly higher than the 2.73 per cent offered by the January issuance. The 10-year average return for the latest tranche was 2.82 per cent, down slightly from the preceding tranche’s return of 2.86 per cent.
Applications for the latest tranche closed on Jan 24, and the bonds will be issued on Feb 3.
In 2024, the November issuance of SSB marked a new low by absolute value for applications received since February 2022, with applications of S$99.6 million for the S$600 million on offer.
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In its latest quarterly outlook report, Eastspring Investments noted that during the fourth quarter of 2024, global government bonds generally declined. This coincided with a notable increase in US Treasury yields, notwithstanding two 25-basis-point cuts in the federal funds rate to a target range of 4.25 to 4.5 per cent.
This year, the US Federal Reserve is projected to scale back on the pace of rate cuts, making just two quarter-percentage-point reductions by the end of the year.
Mark Haefele, chief investment officer at UBS Global Wealth Management, pointed out that bonds “remain attractive”, even though yields have come off their peak. He favours high-quality segments, particularly government and investment-grade bonds.
“We forecast lower yields over 2025 as inflation cools and the Fed gradually cuts policy rates. Given the recent curve steepening, we recommend investors to improve yields by switching from cash into medium-duration bonds.”
