The underperformance of Singapore-dollar bonds is making way for buyers to return as the nation now offers the highest real yields among top-rated countries.
Singapore’s bonds were sold off in mid-February after the government announced plans to sell additional debt to finance infrastructure projects in the city state. The nation’s inflation-adjusted 10-year yield now offers a 62 basis points upside, compared to negative spreads for most other AAA-rated countries.
“The repricing has taken place, and at the end of the day, supply of Singapore dollar bonds will still be modest compared to most other countries,” said Irene Cheung, senior strategist at Australia & New Zealand Banking Group. She expects decent demand for the new bonds to fund infrastructure projects.
