Singapore T-bill’s cut-off yield at 3.85% in latest auction

Tay Peck Gek

Published Thu, May 25, 2023 · 02:43 PM

THE latest cut-off yield for Singapore’s six-month Treasury bill (T-bill) that closed on Thursday (May 25) was 3.85 per cent per annum – seven basis points higher than the tranche auctioned a fortnight ago.

The higher yield could be attributed in large part to a shift in United States Federal Reserve expectations, said DBS senior rates strategist Eugene Leow.

He noted that the market was worried that rate cuts by the Fed might take place as early as the third quarter. Now, the market is pricing in decent odds of another hike in that quarter. “Short-term Singapore-dollar rates got dragged higher accordingly,” he said.

The S$5.3 billion government guaranteed risk-free fixed income instrument for auction on Thursday had only 2 per cent of competitive applications at the cut-off yield allotted. Those who bid at a lower yield were fully allotted, whereas those specified a higher yield went away empty-handed.

The non-competitive buyers were fully allotted as the aggregate amount of S$1.4 billion did not exceed the 40 per cent allotment value set aside for bids that did not specify a yield.

The present auction was 2.3 times subscribed as the amount applied totalled S$12.2 billion, with the median yield at 3.6 per cent and the average yield at 3.15 per cent.