[SINGAPORE] The cut-off yield on Singapore’s latest six-month Treasury bill (T-bill) fell to 1.79 per cent, based on auction results released by the Monetary Authority of Singapore on Thursday (Jul 17).
This is a decline from the 1.85 per cent offered in the previous six-month auction that closed on Jul 3. It is yet another low that yields have hit in the year to date, and marks the ninth consecutive issuance since Mar 26 for which yields have declined.
Demand for the latest tranche fell. The auction received a total of S$15.5 billion in applications for the S$7.6 billion offered, representing a bid-to-cover ratio of 2.04. In comparison, the previous auction received a total of S$16.1 billion in applications for the S$7.5 billion on offer, representing a bid-to-cover ratio of 2.15.
Median yield for the latest auction stood at 1.73 per cent, falling slightly from 1.76 per cent in the previous round. The average yield dropped to 1.6 per cent, from 1.64 per cent previously.
All non-competitive bids were allotted, amounting to S$1.2 billion, while around 44 per cent of competitive applications at the cut-off yield were allotted.
Singapore announced in November last year the issue of up to another S$450 billion in government securities. A parliamentary motion had been passed to raise the government’s issuance limit to S$1.515 trillion, from S$1.065 trillion before.
Speaking on the downward trend of cut-off yields, Eugene Leow, senior rates strategist at DBS, said: “There has been a gradual grind lower in T-bill cut-offs despite the (US Federal Reserve) hold. However, we think that further declines would likely slow given that the Fed may not cut in July and the US dollar is starting to show some signs of firmness.”
OCBC’s head of foreign exchange and rates strategy, Frances Cheung, said that the cut-off was within an expected range, but cautioned against extrapolating the downtrend. She added: “For most tenors of Singapore dollar swap rates, they may be seen as capped at the 1.8 to 2 per cent area for now, while 1.5 per cent appears to be the interim floor.”
