Singapore’s latest 6-month Treasury bill auction draws record 92,000 bids totalling S$14.2b

INVESTORS poured a massive S$14.2 billion into Singapore’s latest six-month Treasury bill (T-bill) auction in a record-high volume of applications.

Consequently, the results of the auction which ended with a cut-off yield of 4 per cent were delayed on Thursday (Nov 10) by over five hours.

Against an allotment size of S$4.5 billion, the application monies represented an oversubscription rate of 3.2 times. In a notice on Thursday evening, the Monetary Authority of Singapore (MAS) said: “Today’s auction for the six-month T-bill (BS22122Z) received over 92,000 bids, which is a record high and far exceeds the bids received for the last T-bill auction.”

The non-competitive applications were allotted on a pro-rated basis, with only 49.68 per cent allotted – a first this year. T-bills of this tenor issued in the year to date saw all non-competitive applications – being under 40 per cent of the allotment amount – satisfied.

Of the competitive applications, about 64 per cent were allotted at the cut-off yield.

The previous record for applications for issuances this year was S$12.3 billion – for the May 26 auction of an allotment of S$4.5 billion, which had a cut-off yield of 1.8 per cent.

Interest in government bonds has climbed with rising yields, borne out by the latest auction. The MAS had to put out a notice in the afternoon to announce the delay in publication of the results because of the sheer volume of applications.

The T-bill’s cut-off yield was at a decades-high of 4.19 per cent a fortnight ago, with S$10.9 billion in applications vying for an allotment of S$4.6 billion.

The risk-free, fixed-income instrument last achieved a yield of 4 per cent in 1989, after having peaked at 4.73 per cent in 1988, according to data from MAS’ website, which showed results dating back to 1987.

Before the auction closed on Thursday, investors were discussing online whether to apply for T-bills with a competitive yield, which is the yield to enter if one chooses to go for a competitive bid, as well as whether they ought to use Central Provident Fund (CPF) funds for the purchase – especially after the issuance a fortnight ago received non-competitive bids in value amounting to nearly 40 per cent of the allotment size.

In a non-competitive bid for T-bills, the investor specifies only the amount to invest and accepts the cut-off yield. Investors who would want to invest only if the yield is above a certain level should submit a competitive bid.

Up to 40 per cent of the total issuance amount will be allotted to non-competitive bids first. If the amount of non-competitive bids exceeds 40 per cent, the bond will be allocated to non-competitive investors on a pro-rated basis, with the balance of the issuance amount going to competitive bids from the lowest to highest yields.

T-bills can be purchased with cash, Supplementary Retirement Scheme funds or CPF monies, although use of CPF requires physical attendance at any branch of the local banking trio.

MAS is working closely with the local banks to process refunds for unsuccessful applications by Nov 11 (Friday). Investors who applied for T-bills using CPF funds will be able to check their allotments after the Nov 15 issuance date, said the authority in the notice.

CPF Board figures furnished in response to queries by The Business Times showed there were over 3,000 successful applications made using ordinary account (OA) savings, amounting to over S$450 million in value, in October. But the CPF Board did not provide information on the average savings amount used, the range of savings amounts used, and the median age of members who used OA funds to buy T-bills, as it does not have the numbers in breakdown.