Dear readers, the August 2023 Singapore Savings Bonds closed yesterday.
I have shared in a previous post that the average 2.99% per annum for 10 years is considered a good deal for savers as savers are effectively locking in an annual interest rate close to 3% per annum for 10 years.
Against the general backdrop of declining interest rates from banks, I would expect that the demand for the August 2023 Savings Bonds to be decent. And hence it was a surprise to me to read of the result yesterday for the August 2023 Singapore Savings Bonds.
The application amount for the August 2023 Singapore Savings Bonds was lower than the S$294.2 million allotted (details here). I believe there are two reasons for the lacklustre response.
First, savers may be parking their monies in T-bills (latest issue at 3.74% per annum) and other fixed deposits with more than 3% per annum.
Second, savers may be waiting for possible later issues of Singapore Savings Bonds that could reach 3% per annum in average 10 years interest rates.
I would like to highlight that the beauty of Singapore Savings Bonds is that it is a bond with a long tenure (10 years) and hence the decent annual interest rates, once bond is allotted is for the longer term.
And the second beauty of the Singapore Savings Bonds is that the bonds is liquid, meaning to say in the event savers are aware of a higher interest rate bond, fixed deposit, money market fund, there is no stopping savers from liquidating the Singapore Savings Bonds they hold and redeploying the capital freed up for higher interest rates.
That’s it for my insights today. I Thank you once again for your support of SG STOCKS INVESTING, your Money and Lifestyle magazine! Connect with me here to follow the daily exciting and useful posts on these two blogs, Thank You for your support!
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