Latest Singapore 6-month Treasury bill offers 3.84% cut-off yield

SINGAPORE’s latest six-month Treasury bill (T-bill) has closed its auction with a cut-off yield of 3.84 per cent on Thursday (Jun 8).

In comparison, the previous auction for the six-month tenor of the government-backed fixed income product offered a cut-off yield of 3.85 per cent.

The latest auction received total applications of S$11.5 billion for the S$5.2 billion on offer, giving it a bid-to-cover ratio of 2.2.

Non-competitive bids totalled S$1.9 billion and were fully allotted.

Those who submitted competitive bids at the cut-off yield were allotted around 44 per cent of their applications. Those who specified a lower yield were fully allotted, and those who specified a higher yield were not allotted.

In a note on Tuesday, OCBC rates strategist Frances Cheung noted that the spread between the Singapore dollar and US dollar rates have become more negative with the US dollar rates rising more rapidly.

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Cheung noted that some stabilisation in the US dollar rates is needed for the difference to be less negative.

The US Federal Reserve can afford to pause rate hikes at its next meeting in June, and rates at current restrictive levels should be able to combat inflation even without additional hikes, she said.

Meanwhile, the US T-bill yield curve had steepened in anticipation of a debt ceiling deal, but Cheung does not expect a material upward impact on bill yields.

She expects the Singapore dollar Overnight Indexed Swap (OIS) rate – which is used to price Singapore dollar bonds – to rise mildly and stay mostly stable till the third quarter of 2023, before easing towards the year-end and in 2024.