Singapore Savings Bond: 100% allocation to all applicants

So much for people worrying if they wouldn’t get the full amount applied, eh?  It’s almost like a bad IPO, haha.

From the recent MAS media release today, it is now known that the 1st virgin maiden issue was massively under-subscribed.

If you check out the SSB maiden issue (Oct 2015), the amount available to be allocated is a staggering $1.2 billion. This issue was pathetically 34.6% subscribed.

Only a total of $413,161,000 was applied for by a puny puny 19,505 applicants (or 3 out of every 1000 people you see in Singapore), and that works out to be an average of $21,182.31 applied per person.

And yet I can assure you tons of people bought the GE 2% policy, which is bullshit.

You can bet your sweet ass that all the cash rich upper class Singaporeans dumped $50,000 (max limit per issue) into this issue and will be dumping $50,000 into the next issue, which would probably be yielding even higher. My estimate is 15bps higher on the tail end of the curve.

What more is that most of the people with $50,000 to throw at this have probably already done it, so in the issue after the next, the amount of people as well as the dollar value is going to massively shrink.

I don’t know if MAS will accordingly lower the total amount available in the future since this kind of under subscription looks pretty bad. However, I do hope that they do not lower the amount and take into the account why they are offering the SSB in the first place. This big under-subscription is a fantastic thing for those people who have chosen to add the SSB as a tool into their portfolio! You do not have to worry about redeeming your previous SSB to roll into a higher yielding issue and not being able to apply for the full amount in the next auction. There is very low risk of not being fully allocated and thus bearing some opportunity cost waiting in cash until you can stuff the balance into the next issue.

My thoughts on the SSB still remain the same: Just like many many many many of the other available tools provided by the government that individuals are free to use to improve their financial situation (CPF, SRS, CPF Life, Medishield, DIRECT insurance, etc etc), the SSB is likely to be misunderstood and underutilized, particularly by the people that would benefit from it the most. It’s just like term insurance. I bet if you compare the average income of term insurance buyers vs whole life insurance buyers, you would be startled by the findings.

When AK was talking about CPF, I think he hit it right on the nail when he called it a “self-help institution”. CPF was not created to provide charity for Singaporeans. CPF is a tool that can be used by the individual to help themselves, only if they know how to use it. This is similar to the whole slew of other government programmes. It is only great for the people who know about them and how to use them. Ignorance might be bliss, but it might also be costing you… a lot of money.

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