The Curious Case Of the Singapore Savings Bonds

Confused Cat by Slava

30 Sep The Curious Case Of the Singapore Savings Bonds

There were 19,505 successful applicants of the Singapore Savings Bonds (SSBs) who would invest a collective sum of S$413m, or an average of S$21,174 each.

This is an under-subscription in many people’s eyes considering Monetary Authority of Singapore catered S$2 billion to S$4 billion for the first few SSB issues. There was an expectation of high demand…

Why is there an under-subscription?

Alfred Chia from SingCapital said in an interview that it could be because the investors need Central Depository accounts and not everyone has one. It would take a while for investors to open their accounts to hold the SSBs. He might be right as this news report said that SGX saw an average of 8,500 new CDP accounts per month since July 2015, up from 6,500 previously.

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My 15 HWW shared his thoughts on this issue and he suggested some plausible reasons such as investors expect higher interest rates in the future (because of Janet Yellen) and lack of confidence in the Singapore Government securities (because of protesters against CPF).

In such cases, without more data, we are unable to really tell the cause/s of this situation. And it could be a temporary issue and the subscriptions could indeed go up.

I would like to offer an alternative view point in this article. My hypothesis is that Singaporeans do not have a culture investing in bonds directly.

Let us look at the household’s assets to determine what Singaporeans typically invest in. According to Singstat’s household sector balance sheet, ending 2015 second quarter, the breakdown of assets are as such:

  • Property: 46%
  • Currency and Deposits: 20%
  • CPF: 16%
  • Life Insurance: 8%
  • Listed shares: 5%
  • Unlisted shares (private companies): 2%
  • Unit Trusts and Funds: 2%
  • Pension Fund: 1%

Based on the above, we can consider CPF, Life Insurance and Unit Trusts to be bond-related. Else, there isn’t any mention of bonds in the household wealth. It isn’t wrong for a younger person to have stocks and less or no bonds in his investment portfolio as long as he can take the volatility. However, we know that our population is aging and elders should see more bonds in their portfolio as they go into retirement years. This clearly wasn’t the case based on the breakdown of household balance sheet.

Why is that so? Is it a lack of awareness about bonds?

Actually the SSB isn’t the first ‘flop’ when it comes to encouraging Singaporeans to buy bonds. The Singapore Government Securities (SGS) Bonds were made available for secondary trading on SGX since 8 Jul 2011 and you can take a look at the almost non-existent trading volume pictured below (screen shot from on 29 Sep 2015).

SGS Bonds Volume

Maybe it is because our Singapore Government has done a good job to secure a triple-A rating such that the bond yields become too low for many investors’ appetite.

Maybe the retail investors are more than happy to invest in corporate bonds giving higher yields at 5% or more. But there aren’t many choices unless you are an accredited investor with a wealth banker dishing those corporate bonds to you. As a retail investor, there are only 7 corporate bonds available on SGX (screen shot from on 29 Sep 2015):

Corporate Bonds on SGX

I tend to believe it is a demand issue – investors are generally not keen on bonds. A heuristic evaluation of the investors I meet tend to prefer properties and stocks. Even so, property investments have slowed with the cooling measures in place and stocks trading volume on SGX hasn’t been encouraging at all.

Are Singaporeans not investing at all at this moment?

Photo credit: Slava


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  • Rolf Suey
    Posted at 22:54h, 30 September Reply

    Hi Alvin,

    Great article. I am subscribe to SSB and may add more in time to come.

    In my humble opinion, this generation of working class is still lacking not only knowledge of investing, but also INTEREST and TIME! Most are either too pre-occupied in work or family. I seriously doubt majority of the working class population will have time to go in depth to acquire knowledge of investing, unless faced with some sort of “trigger”.

    To many of my peers, they hear more stories of people invest losing money, than they hear people buying properties losing money!

    So imagine you are one of the average working class who has neither time nor interest in investing, judging by historical stories statistically “you heard”, where will you put your money?

    Just my thoughts!

    PS: I am passionate about financial education even though I am Engineer trained just like you.

    • Alvin Chow
      Posted at 14:18h, 01 October Reply

      Thanks Rolf for dropping by :)

      And yes, I see my peers get occupied by day-to-day stuffs. Well, as long as they are happy and be willing to accept the outcome then I guess it is all good.

    • Tang Hong Yeow
      Posted at 00:02h, 20 October Reply

      If you don’t help yourself, nobody can help you

  • Nobody Told Me About Singapore Savings Bonds | The Turtle Investor
    Posted at 21:29h, 01 October Reply

    […] Big Fat Purse My 15 Hour Work Week Got Money, Got Honey! […]

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