February Issuance Offers S$500 Million with First-Year Interest Rate of 2.76%

The 10-year average return for the latest tranche of Singapore Savings Bonds (SSBs) has decreased to 2.82%, following a trend in lower returns influenced by rate cuts from the US Federal Reserve. This marks a slight dip from the previous issuance’s 10-year average return of 2.86%.

The February 2025 issuance, which opened on January 2, offers an interest rate of 2.76% for the first year, slightly higher than the 2.73% rate in the January issuance. The interest rates for SSBs are determined by the average yields of Singapore government bonds from the previous month but are adjusted to prevent returns from decreasing when the yield curve inverts, meaning short-term yields exceed long-term ones. These adjustments ensure that returns on SSBs remain stable and potentially increase over the holding period.

The February issuance has S$500 million available and will close on January 24, with allocations made on January 27 and bonds issued on February 3.

Demand for SSBs has been declining in recent tranches, reflecting the fall in yields. The January issuance received S$326.3 million in applications for the S$600 million offered. In December, the US Federal Reserve reduced interest rates by 25 basis points, bringing the target range to 4.25%–4.5%. While further cuts are expected, the Fed is projected to slow the pace of reductions, with just two additional quarter-percentage-point cuts anticipated by the end of 2025.