In a situation where total applications exceed the total issuance size, Savings Bonds are allocated according to the "Quantity Ceiling" format.
Each applicant will receive at least $500 of Savings Bonds. The amount will increase in multiples of $500 for every applicant until either an applicant has received the full amount applied for, or until all the available bonds have been allotted, whichever comes first.
If the number of applicants is so large that issuing $500 per applicant will exceed the amount of bonds available, the bonds will be allocated among applicants randomly, with each receiving $500 worth.
This means that you may not get the full amount you applied for. Smaller applications will also have a higher chance of being fully allotted.
The cutoff amount is an important number to look out for when MAS announces the application result of each Savings Bond.
If your application is:
- Equal to or less than the cutoff amount, you will get the full amount you applied for.
- Above the cutoff amount, you will get either the cutoff amount or $500 more than the cutoff amount. The additional $500 is randomly distributed.
Suppose the Government plans to issue up to $10,000 of Savings Bonds. Four individuals applied for a total of $18,000 of Savings Bonds: A ($2,000), B ($4,000) C ($5,500) and D ($6,500).
The available bonds will be spread out among as many investors as possible in the following manner:
- Applications are filled in denominations of $500 upwards.
- After Round 4, $8,000 of Savings Bonds have been allotted, and Investor A's application has been fully met. $2,000 of Savings Bonds are left.
- In Round 5, $1,500 of Savings Bonds are allotted.
- In Round 6, the remaining $500 is insufficient to fill all applications.
- One person among Investor B, Investor C and Investor D is randomly allotted the remaining $500. In this case, Investor C gets it.
The cutoff amount in this case is $2,500. In the final allotment:
- Investor A is allotted $2,000.
- Investor B and Investor D get $2,500 each.
- Investor C gets $3,000.