Singapore's December Savings Bond will pay an average of 2.39% a year if held for the full 10 years, down from 2.45% on the November issue, even as its first-year rate rose to 1.83%. Separately, six-month Treasury bills cleared at a cut-off yield of 1.86% at the Nov. 4 auction, according to Monetary Authority of Singapore data, retreating from 1.95% two weeks earlier.

For savers in Singapore, the two moves point the same way. Short-term returns on government paper have stopped climbing for now, and the reward for locking money away for a decade has thinned. Bank fixed deposits, at least at the top of the market, still pay more than either product over six to 12 months.

December Singapore Savings Bond: higher start, lower finish

The December bond, issue code GX26120A, steps up from 1.83% in year one to 2.83% in year 10, according to a rate breakdown published by personal finance site Little Big Red Dot. The November bond started lower, at 1.67%, but finished higher, at 3.08% in its final year. The October issue's first-year rate was 1.65%.

That shape matters for how long a saver expects to hold. A buyer who keeps the December bond for two years would average about 1.91% a year, and about 2.16% over five years, the site's figures show. Most of the value of a higher 10-year average goes to those who hold to the end.

MAS raised the issue size to S$500 million from S$400 million for November, its data show. Demand has not been testing that ceiling. The November issue drew applications of S$310.7 million and allotted S$293.2 million, and October's drew S$243.4 million against the same S$400 million size, so every valid application within the limits was filled.

Applications for the December issue close on Nov. 25, with results on Nov. 26. The bond is issued on Dec. 1 and matures on Dec. 1, 2036. The minimum investment is S$500, and interest is paid every six months, with the first payment on June 1, 2027.

Singapore T-bill yield falls as bids jump

The six-month bill auctioned on Nov. 4, issue code BS26122V, drew S$20.8 billion in bids for S$8.5 billion on offer, a bid-to-cover ratio of 2.45 times, MAS data show. At the Oct. 22 auction, investors bid S$16.1 billion for S$8.6 billion, a ratio of 1.87 times.

More money chasing slightly fewer bills pushed the clearing yield down. Beansprout founder Gerald Wong said in a note that higher demand and a smaller issuance size were the main factors. The median bid was 1.80% and the average bid 1.63%, both lower than at the previous auction (1.90% and 1.83%).

Retail investors who placed non-competitive bids, which accept whatever yield the auction sets, received their full allocation: about S$1.6 billion in total. Those bills are issued on Nov. 10 and mature on May 11, 2027. Competitive bidders at the cut-off yield received 85.52% of the amount they bid for, compared with 34.96% at the Oct. 22 auction.

The last one-year bill, auctioned on Oct. 15, cleared at 1.92%. Our October look at savings bond and T-bill yields tracks how far bill yields had climbed before this auction.

How Singapore deposits compare

Banks are still paying more than the government at shorter tenors. The best six-month Singapore dollar fixed deposit rate tracked by Beansprout was 2.10% a year, and the best 12-month rate 2.19%, both above the latest bill and the savings bond's first-year rate. We covered the banks behind those offers in a recent report on fixed deposit rates at Maybank and Hong Leong Finance.

The trade-offs differ by product. Fixed deposit promotions often carry minimum placements or require fresh funds, and breaking one early usually costs interest. A six-month bill cannot be cashed in before maturity without selling it in the market. A savings bond's higher rates sit in its later years.

The difference between the 2.19% deposit rate and the 1.86% bill yield works out to roughly S$16.50 over six months on S$10,000, before considering those conditions.

The next figures to watch are the result of the December savings bond on Nov. 26, which will show whether the larger S$500 million issue draws more buyers, and the next six-month T-bill auction, which will show whether yields recover toward the Oct. 22 level of 1.95%.