Latest 6-month T-bill offers 3.87% cut-off yield after spike in last auction
Tan Nai Lun
THE latest six-month tenor of the Singapore Treasury bills (T-bills) is offering a cut-off yield of 3.87 per cent, at the close of its auction on Thursday (Oct 12).
This is down from the cut-off yield of 4.07 per cent offered in the last auction for the six-month T-bills, which several analysts noted was an anomaly.
Then, analysts noted that the spike in the cut-off yield was likely a one-off instance, as the Singapore Overnight Rate Average (Sora) fixings and cut-offs on Monetary Authority of Singapore bills have been stable, and markets had not reacted much to the auction outcome.
Nevertheless, the latest cut-off yield is still higher than the 3.73 per cent offered two auctions ago, which closed on Sep 14.
Applications for the T-bills jumped in the latest auction.
The auction received applications worth a total of S$14.7 billion for the S$5.4 billion on offer, representing a bid-to-cover ratio of 2.73.
In comparison, the previous auction received S$9.3 billion in total applications for the S$5.3 billion on offer, representing a bid-to-cover ratio of 1.76.
The latest print points to some normalisation from the oddly high cut-off registered in the previous auction, which also probably encouraged more investor demand, said DBS senior rates strategist Eugene Leow.
But Leow expects short-term Singapore dollar rates to be stuck in the current rate for the foreseeable future, given that the odds of another interest rate hike by the Federal Reserve have fallen materially with less hawkish Fed speak.
Some 79 per cent of non-competitive applications, amounting to S$2.2 billion, were allotted in the latest auction.
Meanwhile, around 68 per cent of competitive applications at the cut-off yield were allotted.
T-bill yields hit a 30-year high of 4.4 per cent in December 2022, but have hovered mostly around the 3.7 per cent to 3.8 per cent range since March this year.
Yields crossed the 4 per cent mark for the first time since January in the auction that closed on Sep 28.
