Cut-off yield on latest 6-month T-bill falls to 3.7%

THE cut-off yield on the latest Singapore six-month Treasury bill (T-bill) has fallen to 3.7 per cent, according to auction results released on Thursday (Jan 18).

This was down from the 3.74 per cent offered in the previous six-month tranche, which closed on Jan 4.

Demand for T-bills remained strong in the latest tranche. The latest issuance received S$13.6 billion in applications for the S$6.4 billion on offer, representing a bid-to-cover ratio of 2.12.

In comparison, the previous issuance received S$12.8 billion in applications for the S$6.1 billion on offer.

Eugene Leow, senior rates strategist at DBS, expects demand for T-bills will stay strong for a while more, and that the rates will likely stay above 3.5 per cent for some time.

“The market is trying to make up its mind, oscillating between hawkishess and dovishness. With US data firm, very dovish rates pricing is being pushed back,” he said.

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Around 87 per cent of the non-competitive applications at cut-off, totalling S$2.6 billion, were allotted. (*See amendment note)

Around 51 per cent of competitive applications at the cut-off yield were allotted. Those who specified a lower yield were fully allotted, and those who specified a higher yield were not allotted.

T-bill yields hit a 30-year high of 4.4 per cent in December 2022, but have mostly hovered around the 3.7 to 3.8 per cent range since March 2023. Nevertheless, demand for them has remained strong as they continued to yield higher returns amid the high-interest-rate environment.

*Amendment note: An earlier version of this story incorrectly stated the amount of non-competitive bids allotted.