Latest Singapore 1-year T-bill cut-off yield falls to 2.29%

The Republic’s latest one-year tranche of Treasury bills (T-bills) is offering a cut-off yield of 2.29 per cent, according to auction results released by the Monetary Authority of Singapore on Wednesday (Apr 16).

This is down 0.66 percentage point from the 2.95 per cent offered in the auction for the previous one-year tranche in January.

Frances Cheung, head of foreign exchange and rates strategy at OCBC, noted that market interest rates have fallen materially since the last one-year T-bill tranche in January.

“The 66 basis points fall is not as big as the movements in some Singapore dollar interest rates during the period, which is on the high side of expectation,” she said.

The auction received a total of S$11.2 billion in applications for the S$5.3 billion on offer, representing a bid-to-cover ratio of 2.11.

In comparison, the previous auction received S$10.1 billion in applications for the S$5.4 billion on offer.

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Median yield in the latest auction stood at 2.13 per cent, down from 2.83 per cent in the previous auction.

The average yield fell to 2.11 per cent, a decrease from 2.72 per cent previously.

Non-competitive bids totalled S$473.3 million and were fully allotted.

About 55 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.

Eugene Leow, head of fixed income research at DBS, said that Singapore dollar liquidity has become “increasingly flush”, pushing short-term rates lower even in the absence of US Federal Reserve cuts.

“Even the flattening of the Singapore dollar nominal effective exchange rate (S$NEER) slope twice this year did not move short-term Singapore dollar rates higher relative to US dollar rates,” he noted.

At this point, there does not appear to be any trigger on the horizon that may nudge short-term Singapore dollar rates higher, said Leow.

“Low Singapore dollar rates also reflect an increasing chance that the Fed would have to cut rates more aggressively amid the tariff war.”