Yield on latest Singapore 6-month T-bill jumps to 4.07%
Tan Nai Lun
SINGAPORE’S latest six-month Treasury bill (T-bill) offered a cut-off yield of 4.07 per cent, in the auction that closed on Thursday (Sep 28).
This is a jump from the cut-off yield of 3.7 per cent for the previous six-month tenor, and the first time that yields have crossed the 4 per cent mark since January.
Demand for the T-bills was down in the latest auction, with a total of S$9.3 billion in applications for the S$5.3 billion on offer, representing a bid-to-cover ratio of 1.76, auction data on the Monetary Authority of Singapore’s (MAS) website indicated.
In comparison, the last auction had a bid-to-cover ratio of 2.03, with S$11.2 billion in total applications against a total of S$5.5 billion allotted.
Eugene Leow, senior rates strategist at DBS, said that the spike in the cut-off yield is likely an anomaly, especially given that the Singapore Overnight Rate Average (Sora) fixings and cut-offs on MAS bills have been stable.
Some worries about further interest rate hikes by the US Federal Reserve by the end of the year may also be kicking in, he added.
CGS-CIMB economic consultant Song Seng Wun said that the higher yield may be a reflection of recent expectation that the US central bank may still have room to go higher, and that rates would stay higher for longer.
Singapore typically does not determine its own rates but instead tracks global benchmarks, such as US Treasury yields, Song noted.
In recent days, US 10-year Treasury yields have risen to a 16-year high of 4.6 per cent, while two-year yields also hit a 17-year high of 5.2 per cent.
OCBC rates strategist Frances Cheung added that investors probably required a higher premium to guard against the risk of rates staying high for longer. She expects the high yield may be a one-off instance, however, given that the market did not react much to the T-bill auction outcome.
In the latest auction, non-competitive bids totalled S$1.8 billion and were fully allotted.
Around 99 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 hovered around the 3.7 to 3.8 per cent range since March this year. This was apart from an auction in July, when yields rose to 3.99 per cent.
