THE latest Singapore Savings Bond (SSB) allotted on Wednesday (Aug 28) saw a fall in the number of applications, as yields slipped from the earlier tranche.
The September tranche of the Singapore government-backed bonds received a total of S$829.4 million in applications, for the S$900 million that was offered. A total of S$799.4 million was applied within individual allotment limits, and this amount was fully allotted.
In comparison, the August issuance received S$969 million in applications for the S$1 billion on offer.
The latest tranche offered a first-year interest rate of 3.06 per cent and a 10-year average return of 3.1 per cent.
This is down from the August issuance, which offered a first-year interest rate of 3.19 per cent, and a 10-year average return of 3.22 per cent.
Applications for the SSB closed on Aug 27, and the bonds will be issued on Sep 2.
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In the first half of 2024, demand for SSBs fell as yields slipped below 3 per cent, in line with expectations of a rate cut by the United States Federal Reserve.
As inflation rates fall towards the central bank’s 2 per cent target and the US labour market cools, the Fed is expected to cut rates in September.
Fed chief Jerome Powell signalled as much last Friday during a speech at the Kansas City Fed’s annual conference in Jackson Hole, Wyoming. “The time has come for policy to adjust,” he said.
Powell added that the timing and pace of any rate cuts would hinge on incoming data, and that he was now more confident that US inflation was on a sustainable path to the Fed’s target.
SSBs take their interest rates from the average yields of Singapore government bonds from the month before.
They are, however, subject to adjustments to ensure that interest rates do not dip over time and form inverted yield curves, in which the yields of short-dated bills exceed those of longer-dated bonds.
