Thursday, May 26, 2016

Singapore Savings Bond: May 2016 Review, Jul 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 have made a similar posts in previous months, 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 May 2016 SSB, we see the first uptick in SSB allocation. That's almost 8% of the issue. Which is funny considering that it was one the worst issues ever. Interesting relationship of low yields with higher investor interest? Who knows. People can be crazy, stupid or both.


This month, there is no the yield curve inversion. The MAS rates showed strong levels of prediction to the actual SSB issue, confirming the relationship that we have identified.

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: May 2016 rates are used for the July 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: May 2016 applicants will receive the July 2016 issue). I hope this clears up some of the confusion people have regarding the names of the issues.


There are 17 out of 22 data points available for this estimate. I would hazard a guess of 0.95 / 1.05 / 1.60 / 2.00 as the final yields.

This upcoming issue looks set to be better than this current SSB issue. It can be expected to be better across all time frames. Next month's issue is definitely better the current month's issue, if your decision were really that simple and binary. So if you really want to buy some SSBs and are not sure when, it would be advisable to wait for a week and apply for it next month.

Today is the last day of applications, which closes at 9pm. It can be done through ATMs or iBanking.

I would not be applying for this month's issue, and I'm 99% I will not be applying for next month's one as well.

2 comments:

  1. Im pretty sure you are referring to the Jun issue instead of the Jul preview... :P

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    Replies
    1. Haha eh no leh wolf! June issue is already known, so I'm comparing June to what I am estimating (and thus, previewing) for the July issue!

      In a nutshell, the July issue looks more attractive than the June issue, so it would be better to wait and apply for the July issue in June, rather than apply for the June issue in May (which is already closed).

      I have to admit, the naming for SSBs is very confusing!

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