The difference between SGS and SSB in Australian Bonds

The first type, SGS, stands for “secondary market yield” and is determined by investors buying and selling existing bonds in the secondary market (AU finance). The rate can significantly change since it is affected by supply and demand.

The other type, SSB, stands for “secured supply basis”, which determines the interest rate on newly-issued bonds. It is determined by the central bank’s monetary policy (which changes how much money flows through to borrowers like banks). It isn’t subject to variability because only specific banks can buy these new bonds (called primary dealers) at rates pegged with specific percentages above or below SSB (3% or 1%, respectively).

Who controls them?

SGS is controlled by the secondary market, which is affected by supply and demand daily. SSB is controlled by the central bank through primary dealers daily but does not change as much because only certain banks can buy at those rates.

How they are derived?

SGS is directly related to Treasury yields on a given date. SSB is derived from SGS based on specific percentages set out by the central bank. For example, the New South Wales government uses this type of calculation to issue new bonds every six months.

Who buys them?

Both types of bond yields are available for purchase to everyone. However, SSB is only available to certain banks, as mentioned before.

Price fluctuations

Bond prices will naturally fluctuate as interest rates change and investors try to profit from buying or selling bonds.

SGS will fluctuate more drastically because it considers the entire secondary market instead of just one bank. SSB varies far less because its value is pegged to SGS using a mathematical formula that does not depend much on day-to-day events.

Bond maturity

Both types of bond yields can be calculated using a standard formula and will give you an approximation of when the bond reaches its total value (when you will receive all of the cash flows). 

However, SGS is not as precise because it uses treasury yields to determine current rates instead of considering how much an investor earns on these bonds over time (the return on investment). It only considers the amount paid out in coupon payments divided by face value (which reflects historical values on treasuries). SSB does consider this but still uses average returns rather than future projections based on current rates.


Both types of bond yields are subject to large fluctuations in the bond’s price, which reflects whether or not investors believe that they will receive their money back on time. The current yield level will have an upward impact on the value of these bonds, but only for SSB (because it’s pegged to SGS).


Both bond yields are taxable, but SGS is taxed at a higher rate based on the secondary market. SSB doesn’t take changes in value into account since it is pegged to SGS. However, any increase or decrease from the initial price will be passed down as income tax.

What are the benefits of investing in these bonds?

Higher returns

The price of these bonds will be proportional to the SGS value, which is directly related to treasury yields. Meaning that it reflects how much you can earn with your money on a day-to-day basis. SSB does not change as much because it’s pegged to SGS values and only considers some variables (typically averages) when calculating yield rates.

Security and stability

Both types of bond yields fluctuate based on market conditions and current interest rates, but SSB yields are less volatile because they’re pegged with mathematical equations that do not change very frequently. For instance, SGS is entirely influenced by secondary markets, whereas SSB only uses certain banks for its calculations. Additionally, SGS is closely tied to treasury yields and will eventually reach its total value if the economy eventually recovers.

Protection from inflation

Both types of bonds can be used as a hedge against inflation. SSB is far more effective because it considers current interest rates and how much money you can earn with your capital daily. In other words, SSB reflects actual yield rates instead of using averages from the past.

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