The Curious Case Of the Singapore Savings Bonds

Alvin Chow
Alvin Chow

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.

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

Alvin Chow
Alvin Chow
CEO of Dr Wealth. Built a business to empower DIY investors to make better investments. A believer of the Factor-based Investing approach and runs a Multi-Factor Portfolio that taps on the Value, Size, and Profitability Factors. Conducts the flagship Intelligent Investor Immersive program under Dr Wealth. An author of Secrets of Singapore Trading Gurus and Singapore Permanent Portfolio. Featured on various media such as MoneyFM 89.3, Kiss92, Straits Times and Lianhe Zaobao. Given talks at events organised by SGX, DBS, CPF and many others.
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6 thoughts on “The Curious Case Of the Singapore Savings Bonds”

  1. 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.

  2. Hi Alvin,

    Thank you for your article. I am a frequent reader of your blog and more recently, I bought your book “The Singapore Permanent Portfolio”.

    In your book, you mentioned purchasing the SGS 30 year bond for the bond component of the Portfolio. However, a check on SGX revealed the extremely low volume (180 people) on the secondary market.!ut/p/c5/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gjR0cTDwNnA0sDC3cLA0_XsDBfFzcPQ3dLU6B8JJK8hYG7uYGnYUCQj1OIsZF7gCFJuv1DDYG6Q50CTZzCQg29Pc0I6PbzyM9N1S_IDY0od1RUBAASCg4F/dl3/d3/L2dBISEvZ0FBIS9nQSEh/
    You mentioned that one should buy a bond with the longest maturity for the Permanent Portfolio and this is because you want a bond which is volatile in price. With a low trading volume as observed, would it be possible to obtain the kind of volatility for the bond component to reach 15 or 35% to trigger rebalancing?

    Is there a better alternative to the SGS bond for the Permanent Portfolio? Would the ABF Singapore Bond Index Fund A35.SI be a better choice?

    Thank you.


    • These SGS bonds have market makers. This means there are institutional traders who hold the bond units as inventories and would provide the liquidity to buy and sell (provided at the right price range). So you need not worry about the liquidity. Stocks on the other hand do not have market makers.

      A35 is not a good choice because it has bonds with different maturities, and tend to be shorter term. It would not have the volatility to counter the stocks if market crashes.

      The longest dated bond is BJGS at this moment.


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