February 2025 Issuance Provides S$500 Million with 2.76% First-Year Interest Rate
The average return for Singapore Savings Bonds (SSBs) over a 10-year period has dropped to 2.82%, a result of a downward trend in returns largely driven by recent interest rate reductions from the US Federal Reserve. This marks a slight decline from the previous 10-year average return of 2.86% for the prior issuance.
The February 2025 issuance, which opened on January 2, offers a first-year interest rate of 2.76%, slightly higher than the 2.73% seen in January. The rates for SSBs are based on the average yield of Singapore government bonds from the previous month, with adjustments made to ensure stability, even when short-term yields surpass long-term ones, as seen in an inverted yield curve. These adjustments are designed to prevent a decrease in returns over time, ensuring that they remain stable or rise during the holding period.
With a total of S$500 million available, the February issuance will close on January 24, with allocations set for January 27 and bonds issued on February 3.
Interest in SSBs has been waning in recent offerings, a reflection of the lower yields. For the January issuance, applications amounted to S$326.3 million, significantly less than the S$600 million available. Following a 25-basis-point reduction in interest rates by the US Federal Reserve in December, which lowered the target range to 4.25%-4.5%, further rate cuts are expected. However, analysts foresee a slower pace, with only two more quarter-percentage-point cuts anticipated by the close of 2025.
