Complete Overview of SSB Interest Rate Trends and Projections

The Singapore Savings Bond (SSB) is a risk-free, non-marketable government bond issued monthly by the Monetary Authority of Singapore (MAS). It pays a step-up coupon that rises each year, and investors can redeem any month without capital loss. As a concrete data point, the May 2025 SSB (SBMAY25) offers a first‑year coupon of 2.95% and a 10‑year compounded average return of 3.07%, reflecting a yield curve that has normalised after the fastest tightening cycle in four decades. Understanding how these rates are set—and how to project future coupons—strips away guesswork and turns the SSB into a strategic cash‑flow tool.

How the Step-Up Coupon Structure Works

The SSB does not pay a flat coupon. Instead, its annual interest rate increases from Year 1 to Year 10, a feature called a step-up coupon. MAS calibrates each year’s rate so that the average compounded return over the full 10 years equals the simple average of the one‑year to 10‑year SGS benchmark yields from the preceding calendar month.

For the May 2025 issue, the average of the 1Y–10Y SGS yields was 3.10%. The published coupon schedule—Year 1: 2.95%, Year 2: 3.02%, Year 3: 3.08%, … Year 10: 3.30%—delivers an average compounded return of exactly 3.07%. This aligns with MAS’s methodology, where the average return is slightly below the simple mean of SGS yields because of the way interest is paid annually and compounding is computed. Every SSB issue since 2015 has followed the same transparent formula.

Historical Comparison: SSB Rates 2015–2021

In the SSB’s early years, global rates were anchored near zero. The first issue in October 2015 carried a 10‑year average return of 2.63%, with a Year‑1 coupon of 2.28%. By January 2019, the average had fallen to 2.01% as Singapore’s long‑term SGS yields compressed. The pandemic era pushed rates to historic lows: the August 2020 SSB offered a 10‑year average of just 0.93%, and the Year‑1 coupon slumped to 0.24%. The step‑up spread—the gap between the Year‑10 and Year‑1 coupons—remained remarkably stable, averaging 0.73 percentage points across all issues in this period. This spread is a persistent feature driven by the positively sloped SGS curve.

Historical Comparison: The 2022–2025 Rate Surge and Normalisation

From mid‑2022, Singapore’s SGS yields rocketed in tandem with the US Fed’s 525 bp of rate hikes. The November 2022 SSB posted a 10‑year average of 3.47%, the highest since launch, with a Year‑1 coupon of 3.21%. Rates then moderated, with the October 2023 issue averaging 3.16% and the March 2025 issue at 2.89%. The step‑up spread widened during this cycle, peaking at 1.00 percentage point in the February 2024 SSB, as the yield curve steepened. By May 2025 the spread compressed to 0.35 percentage points, signalling a flattening SGS curve as markets price in rate cuts. This historical spread behaviour is crucial for projecting future coupons.

How to Project Future Step-Up Coupons Using the SGS Yield Curve

Investors can estimate the next SSB’s payout before MAS announces it by monitoring daily SGS benchmark yields. The core equation is:

Average Return ≈ (Y₁ + Y₂ + … + Y₁₀) / 10

where Yₙ is the closing benchmark yield for an n‑year SGS bond on each day of the reference month.

To derive the step‑up schedule, one needs to model the distribution of that average across ten years. Historical data shows that the Year‑1 coupon is consistently 15–20 bp below the 10‑year average, while the Year‑10 coupon is 20–25 bp above it. For instance, if current SGS yields imply a 3.00% average, a conservative projection would set the Year‑1 coupon at 2.80–2.85% and Year‑10 at 3.20–3.25%, with a linear interpolation for intermediate years. A practical check: the actual May 2025 SSB had a 10‑year average of 3.07%, Year‑1 coupon 2.95% (-12 bp) and Year‑10 3.30% (+23 bp), near the historical norm.

What Drives SSB Rates: Three Macro Levers

The SGS yield curve—and thus SSB rates—responds to (1) US monetary policy, (2) Singapore’s core inflation, and (3) global risk appetite. The SGS 10‑year yield closely tracks the US 10‑year Treasury plus a Singapore‑specific term premium. As of early June 2025, the Fed funds rate sits at 4.25%–4.50%, and the US 10‑year yields 4.30%, while Singapore’s 10‑year SGS yields 3.15%. The 115 bp discount reflects Singapore’s stronger fiscal position and MAS’s exchange‑rate‑centred policy.

Domestic inflation is projected to ease to 2.0% in 2025 (core) and 1.8% in 2026, per the MAS April 2025 Survey of Professional Forecasters. Sustained disinflation would allow the Fed to cut rates, compressing SGS yields. Conversely, sticky services inflation or an escalation of trade tensions could keep rates elevated, lifting SSB payouts.

2026 SSB Rate Projections: Scenario Analysis

Based on the SGS forward curve and consensus Fed expectations, three scenarios for the average SSB 10‑year return in mid‑2026:

Scenario	Fed Funds (end‑2026)	SGS Avg (1Y–10Y)	Projected Year‑1 Coupon	Projected Year‑10 Coupon
Base case (gradual cuts)	3.50%	2.95%	2.75%–2.80%	3.15%–3.20%
Dovish (aggressive easing)	2.75%	2.50%	2.30%–2.35%	2.70%–2.75%
Hawkish (reflation fears)	5.00%	3.50%	3.30%–3.35%	3.70%–3.75%

These coupon ranges use the historical step‑up spreads calibrated to an updated curve. Investors building a 2026 SSB ladder can lock in today’s yields while retaining the option to redeem and roll into a higher‑yielding issue if the hawkish scenario materialises.

FAQ

What is the minimum investment in SSBs?
Each SSB application requires a minimum of S$500, with subsequent multiples of S$500. The individual holding limit is S$200,000 per person. (Data: MAS, 2025)

How are the step-up coupons calculated for each issue?
MAS uses the daily average of the 1‑year to 10‑year SGS benchmark yields over the preceding month, then derives a 10‑year coupon schedule so that the compounded average return equals that average. In the May 2025 issue, the SGS average was 3.10%, and the SSB’s 10‑year average return came out to 3.07%. The spread reflects the compounding arithmetic.

When will the 2026 SSB rates be known?
The first 2026 SSB will be announced on the first business day of January 2026, using December 2025 SGS yields. However, investors can project rates as early as November 2025 by tracking daily SGS benchmarks and applying the historical step‑up spread.

参考资料 / References

• Monetary Authority of Singapore, “Savings Bonds – Historical Interest Rates,” 2025.
• Singapore Government Securities, “Daily SGS Benchmark Yields,” 2025.
• U.S. Federal Reserve, “Federal Funds Rate Target Range,” 2025.
• MAS Survey of Professional Forecasters, March 2025.

This article does not constitute financial advice.