Singapore Savings Bonds (SSB) are all the rage again, after the Nov 2022 tranche reached historical highs for the 10-year average yield. Both the mainstream media and the local financial blogosphere have been abuzz with coverage on SSBs, as their interest rates kept achieving new highs, month after month. The incessant news coverage prompted me to relook at SSBs once more, as an investment vehicle.
Immediately, I was faced with the question of whether I should redeem my holdings of vintage SSB tranches, in order to free up some cash to reinvest at a higher rate. But wait — is the current rate really higher than, say, the tranche I’m thinking of redeeming (eg: Oct 2015) ?
As can be seen in the above image, the Oct 2015 tranche (GX15100F) is currently in its 8th year, yielding 3.25%. This is higher than the year 1 coupon from the Nov 2022 tranche (GX22110A), yielding 3.08%. Therefore, this move does not make sense. Perhaps it might be advisable to redeem the Aug 2022 tranche (GX22080V) instead, as that one yields only 2.00%.
The walkthrough above demonstrates one way that this decision support tool can help you to decide if you should redeem your existing holdings of SSBs, to bid for newer tranches. Of course, do also take into account the slope of the yield curve for your tranche of interest (it could be low now, but the curve could be steep, so the interest rate rises quickly), as well as the remaining tenure (interest may be high, but the bond could be maturing soon).
Try out the tool, created using Tableau Public, at: https://public.tableau.com/app/profile/amos7477/viz/SSBAnalysis_0/CombinedDashboard