According to the auction results released by the Monetary Authority of Singapore on Thursday (March 13), the cut-off yield for Singapore's latest six-month Treasury bill (T-bill) has declined to 2.56%.

This rate is lower than the 2.75% recorded in the previous six-month auction that concluded on February 27.

SOURCE: MAS

GRAPHIC: BTVISUAL

Demand for the latest batch of bonds has decreased.

The auction saw a total of S$7.5 billion on offer, with applications amounting to S$19.8 billion, resulting in a bid-to-cover ratio of 2.64.

In contrast, the previous auction received applications totaling S$20.1 billion, with a bid-to-cover ratio of 2.69.

The average yield in the latest auction was 2.5%, down from 2.69% in the previous auction. Meanwhile, the mean yield increased to 2.41% from the prior 2.36%. All non-competitive bids were fully allotted, totaling S$1.9 billion, while approximately 39% of competitive bids at the cut-off yield were allotted.

Frances Cheung, head of foreign exchange and interest rate strategy at OCBC, noted that the cut-off yield was in line with expectations. "The decline in yield followed the drop in Singapore dollar market rates, which in turn fell alongside lower US dollar rates and ample Singapore dollar liquidity," she explained.

Cheung added, "It is uncertain how long the ample Singapore dollar liquidity will last, but we expect limited room for further declines in Singapore dollar interest rates."

Singapore is set to issue up to S$450 billion more in government securities, following the parliamentary approval of a bill in November last year to raise the government bond issuance limit from S$1.065 trillion to S$1.515 trillion. The new limit is expected to remain in place until 2029.