The steepest yield curve on Singapore’s bonds in about three years is signalling the time may be propitious for investors to buy long-dated debt at an auction this month.
A flight to safety following gyrations in US Treasuries in response to Donald Trump’s damaging tariffs, and a sharper decline in shorter debt relative to longer maturities will likely burnish the appeal of the local-currency bonds. The yield premium investors get for holding Singapore’s 30-year securities over its five-year debt is near the highest since March 2022.
“There should be some spillover impact, judging from the selloff in Treasury duration and the weaker dollar,” said Winson Phoon, head of fixed-income research at Maybank Securities Pte. “Singapore could be one of the beneficiaries.”
The outperformance of Singapore’s bonds versus their peers is adding to their appeal. The securities have gained 3.5% in the past three months, beating 21 other major developed markets, according to data compiled by Bloomberg. Treasuries returned 2.5% during the period.
The Monetary Authority of Singapore is scheduled to announce on Tuesday the amount of debt it will auction on April 28.
See also: China kicks off special bond sale as tariffs threaten growth
Phoon estimates the government will seek to raise about $1.8 billion. The city-state’s previous sale of 30-year debt in September 2023 raised $1.5 billion. The auction received bids for more than twice the amount on offer.
To be sure, yields on Singapore’s bonds are still well below those of US Treasuries. Barclays Bank Plc’s foreign exchange and emerging market macro strategist Audrey Ong expects Singapore’s rates to underperform their US counterparts this year on expectations of further currency policy easing by the MAS.
See also: Bond analysts debate if China had role in Treasuries swings
Yields on Singapore’s five-year notes have fallen almost 70 basis points from their January high, compared with a decline of about 30 basis points for 30-year debt.
Abundant Singapore dollar liquidity is weighing on shorter-dated yields, according to Eugene Leow, senior rates strategist at DBS Bank Ltd.
“As front-end rates get dragged lower, some spillover into the longer tenors is likely,” Leow said. “The bid-to-cover will likely be healthy with investors possibly looking at the pickup from extending duration from the 10-year to the 30-year tenor.”
This week’s main economic events in Asia:
- Monday, April 21: China loan prime rates, Indonesia exports
- Tuesday, April 22: New Zealand exports, Malaysia reserves, Taiwan export orders and unemployment
- Wednesday, April 23: PMIs in Japan, Australia and India; Singapore and Malaysia CPI; Bank Indonesia policy decision
- Thursday, April 24: South Korea 1Q GDP
- Friday, April 25: Tokyo CPI, Singapore industrial production
