Monday, January 25, 2016

Singapore Savings Bond: Jan 2015 Review, Mar 2016 Preview

Hey everybody, here's my monthly post on the SSB closing and the forecast for next month. I'm trying to streamline my posts to make them more condensed and info-packed in a regular structure, so it's both easier for readers to quickly digest the article and for me to pump them out on a regular basis.

I made a similar post last month, and I think I will stick with this format.

First up is update of the subscription of the previous issue. As previously mentioned, the SSB will probably have $300 million available to be issued every month of 2016. While it is a HUGE drop from the $1,200 million that they were offering in 2015, the SSB take up rate has been... pathetic, so it makes sense to cut down on the total offer to boost up the fill rate. It looks a look less sad now.


For the January 2015 SSB, a just as pathetic take up rate of just over $40 million was done. That's almost 15% of the issue, but you gotta understand that the total issue has shrank by 75%. Demand for SSBs look low to actually even decreasing in the future.


The month, the MAS has played nicely and given us the tightest variance of the actual SSB compared to interest rates of the benchmarks, even tighter than November

Anyway, moving onto the next SSB, we use the same old-fashioned method of looking up the data from MAS and constructing the table below. As a refresher, the current month's rates are used as a proxy for the issue in 2 months time (For example: Jan 2016 rates are used for the Mar 2016 issue). Also, if you are in the first 3/4 of the current month, you application this month is for the bond that is too be issued on the 1st of next month (For example: Jan 2016 applicants will receive the Feb 2016 issue). I hope this clears up some of the confusion people have regarding the names of the issues.


With 15 out of 20 data points available for this estimate, I think that this is quite reasonably accurate. I would hazard a guess of 1.08 / 1.15 / 1.95 / 2.45 as the final yields.

This looks like a rather weak issue overall. Since I have already subscribed for the Jan 2016 issue and got it, I will be giving the upcoming Mar 2016 issue a pass.

7 comments:

  1. Hi GMGH
    I always look forward to reading your post on SSB because I have yet to buy any. I am waiting for one with similar return as in Nov 2015. Thank you.

    ReplyDelete
    Replies
    1. Hi starlight,

      Always glad to read comments from readers!

      Looking at how yields are collapsing all over the place, it seems unlikely that we will get a yield similar to the Nov 2015 issue in the very near term.

      Delete
  2. Me too. Every month I keep a lookout on SSB post.

    ReplyDelete
    Replies
    1. Hey Anon,

      I'll try and make sure I don't miss any months then, can't make any promises though!

      Delete
  3. Can you teach us how to look up the data from MAS. I clicked on the link but there are a lot of choices to choose :o

    ReplyDelete
    Replies
    1. Hi Unknown,

      Please choose the starting and ending year and month, then set the frequency to daily and lastly select the following:

      1-Year T-Bill Yield
      2-Year Bond Yield
      5-Year Bond Yield
      10-Year Bond Yield

      Delete
  4. How about the starting and ending year/month? Can you give an example

    ReplyDelete

Observe the house rules.