Singapore’s long-dated bond yields get boost from steepest curve since 2022

[ZURICH] 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 US President 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 sell-off in Treasury duration and the weaker US dollar,” said Winson Phoon, head of fixed-income research at Maybank Securities. “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 per cent in the past three months, beating 21 other major developed markets, according to data compiled by Bloomberg. Treasuries returned 2.5 per cent during the period.

The Monetary Authority of Singapore (MAS) is scheduled to announce on Tuesday (Apr 22) the amount of debt it will auction on Apr 28.

Phoon estimates the government will seek to raise about S$1.8 billion. The city-state’s previous sale of 30-year debt in September 2023 raised S$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’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.

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.

“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.” BLOOMBERG