Singapore’s sale of 12-month Treasury bills drew record demand for the maturity as investors sought to lock in higher yields amid speculation they may be close to peaking.
The city state’s sale of $3.6 billion of securities due January 2024 drew total bids of $10.5 billion, an all-time high in data from the Monetary Authority of Singapore starting in 1987. They were sold at an average yield of 3.53%, the highest since 1992, and up from 3.28% at the prior sale in October.
“Demand has been good due to a combination of ample liquidity and the peak-rate narrative beginning to take hold,” said Winson Phoon, head of fixed-income research at Maybank Securities in Singapore. Considering the next 12-month auction will only take place in April, investors may have preferred to lock in the higher yield now before the rates market slips if the US enters a recession, he said.
While yields have been rising at recent bill sales, they are still below the rate of inflation. Singapore’s core inflation rate held at 5.1% in December from a year earlier, according to a government report published Wednesday. That’s just short of the 5.3% pace reported in September, which was the highest since November 2008.
“T-bills offer attractive yields and investors also benefit from SGD appreciation,” said Irene Cheung, a foreign-exchange strategist at ANZ Banking Group Ltd. in Singapore. Despite the Lunar New Year period, demand has held up, coming from institutional investors, who are less impacted by the festive period relative to retail investors, she said.