Singapore Savings Bonds see stronger demand with 10-year average return at 3.15%
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The April tranche of the Singapore government-backed bonds received a total of $758.1 million in applications.
PHOTO: AFP
Tan Nai Lun
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SINGAPORE - The latest Singapore Savings Bonds (SSBs) allotted on Wednesday saw a rise in the number of applications, exceeding the amount on offer, after months of falling demand due to declining yields.
The April tranche of the Singapore Government-backed bonds received a total of $758.1 million in applications, compared with the total of $261.1 million in applications for the March issuance.
A maximum of $700 million in SSBs were offered and allotted through the quantity ceiling format.
Applicants who applied for $68,500 or lower were fully allotted. Around 83.4 per cent of the applications who applied for $69,000 or higher were allotted $69,000 at random.
The remaining applicants were allotted $68,500.
Those successful in their applications will be issued the notes, which have a 10-year tenor, next Monday.
The auction closed with higher demand amid turmoil in the banking industry, due to the collapse of Silicon Valley Bank in the United States and Credit Suisse in Europe, among others.
This tranche of SSBs also offered a higher yield than previous tranches.
The April issuance offered a first-year interest rate of 3.01 per cent, and a 10-year average return of 3.15 per cent.
In comparison, the March issuance opened with a first-year interest rate of 2.76 per cent, and a 10-year average return of 2.9 per cent. A February tranche offered a first-year interest rate of 2.84 per cent, and a 10-year average return of 2.97 per cent.
Interest in SSBs had declined as yields were on a downward trend earlier in 2023.
The February issuance received applications totalling 68 per cent of the amount offered, while the March issuance was less than half subscribed.
Separately, an auction for a 15-year Singapore Government Securities (SGS) bond closed on Wednesday, with a cut-off yield of 2.8 per cent per annum.
The auction is a reopening of an existing bond that matures on July 1, 2039, with a coupon rate of 2.375 per cent per annum.
The SGS auction drew a total of $2.9 billion in applications for the $1.4 billion offer, giving it a bid-to-cover ratio of 2.1.
Non-competitive bids totalled $299.6 million and were fully allotted.
The Monetary Authority of Singapore was allotted $200 million in this auction.
The average yield for the bond instrument stood at 2.55 per cent, while the median yield was 2.7 per cent.
The latest six-month Treasury bill (T-bill) also closed its auction with a cut-off yield of 3.85 per cent on Thursday. The tranche of T-bills – which are risk-free fixed-income products backed by the Singapore Government – were around 2.2 times subscribed for the $4.3 billion allotment.
The total value of applications in this auction was $9.6 billion, down from $12.7 billion in the previous six-month T-bill auction.
The previous issuance had a cut-off yield of 3.65 per cent. THE BUSINESS TIMES
