The Monetary Authority of Singapore (MAS) will offer up to $4 billion worth of Singapore Savings Bonds next year, starting with the January issue of up to $300 million.

The coupon rate - or interest return - for the January issue will start at 1.21 per cent for the first year, rising to 1.31 per cent in the second year and 1.92 per cent in the third. This gives an average annual return of 1.48 per cent over three years and 2.58 per cent over the bonds' full 10-year tenor.

Investors can apply for the January bonds before the application deadline at 9pm on Dec 28.

Singapore Savings Bonds have the unique feature of a "stepped-up" coupon rate: The longer they are held, the better the return.

The MAS rolled out the product in September as a safe, affordable and flexible investment option. Investors can apply in multiples of $500, up to a maximum of $50,000 in a single issue.

The bonds' accrued returns also give investors the flexibility to redeem the bonds ahead of the full 10-year tenor without any penalty.

Despite the advantages, the bonds have received a tepid market response.

Applications for this month's issue amounted to only $40.99 million, significantly below the allotted maximum of $1.2 billion.

Analysts told The Straits Times that investors may be waiting to see when and how fast United States interest rates will rise in coming months. US rates have a direct impact on the return rate of debt instruments such as bonds.

The MAS is committed to issue the bonds every month for at least the next five years.