Latest Singapore six-month T-bill cut-off yield falls to 2.56%

[SINGAPORE] The cut-off yield for Singapore’s latest six-month Treasury bill (T-bill) fell to 2.56 per cent, based on auction results released by the Monetary Authority of Singapore on Thursday (Mar 13).

This was down from the 2.75 per cent offered in the last six-month auction that closed on Feb 27. 

Demand for the latest tranche dropped.

The auction received a total of S$19.8 billion in applications for the S$7.5 billion on offer, representing a bid-to-cover ratio of 2.64.

In comparison, the previous auction received a total of S$20.1 billion in applications for the S$7.5 billion on offer, representing a bid-to-cover ratio of 2.69.

Median yield for the latest auction was 2.5 per cent, down from 2.69 per cent in the previous auction.

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Average yield rose to 2.41 per cent, from 2.36 per cent previously.

All non-competitive bids were allotted, amounting to S$1.9 billion, while around 39 per cent of competitive applications at the cut-off yield were allotted.

OCBC head of foreign exchange and rates strategy Frances Cheung noted that the cut-off yield was in line with expectations.

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Cheung explained: “The lower cut-off (yield) followed lower market Singapore dollar interest rates, which have fallen steadily on the back of lower US dollar interest rates and flush Singapore dollar liquidity at the same time.”

She added: “How long Singapore dollar liquidity stays flush is uncertain, but we expect any further downside to Singapore dollar interest rates to be more limited.”

Singapore will issue up to another S$450 billion in government securities, with a parliamentary motion having been passed in November last year to raise the government’s issuance limit to S$1.515 trillion, from S$1.065 trillion previously.

The new limit is expected to last until 2029.