In a situation where total applications exceed the total issuance size, Savings Bonds shall be 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 that he has 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.
How it works - an example
Suppose the Government plans to issue up to $10,000 of Savings Bonds. Four investors A ($2,000), B ($4,000) C ($5,500) and D ($6,500) applies for a total of $18,000 of Savings Bonds.
The available bonds will be allotted in the following manner:
- Applications are filled in denominations of $500 upwards (Round 1 to Round 4).
- After Round 4, $8,000 of Savings Bonds have been allotted, and A’s application has been fully met. $2,000 of Savings Bonds are left.
- In Round 5, $1,500 of Savings Bonds are allotted.
- The remaining $500 is not enough to fill all applications in Round 6. One person among B, C and D is randomly allotted the remaining $500. In this case, C gets the $500.
At the end, A is allotted $2,000, B and D receive $2,500 each, and C gets $3,000.
The cutoff amount in this case is $2,500. This an important number to look out for when MAS announces the application result of each Savings Bond. Should your application be equal to or below the cutoff amount, you will receive the full amount you applied for. If your application is above the cutoff amount, you will receive either the cutoff amount or $500 more than the cutoff amount.