Singapore's bond market stays resilient despite rising US Treasury yields

Chee Hong Tat, deputy chairman of the Monetary Authority of Singapore, told lawmakers that Singapore’s borrowing costs remain anchored by robust fiscal health despite recent increases in US Treasury yields. He noted that the 10-year Singapore Government Securities yield sits at 2.5%, only slightly above its long-term average, while the spread to US Treasuries has widened to about 250 basis points. Corporate bond issuances in Singapore dollars have totaled around S$28 billion this year and are on track to exceed 2025 levels.

Domestic credit metrics, such as the three-month compounded Singapore Overnight Rate Average, stay below their ten-year averages, indicating a supportive lending environment. MAS stress tests show households and businesses can handle higher rates, aided by safeguards like debt-servicing ratios and a mortgage rate peg to the Central Provident Fund’s Ordinary Account. The central bank’s diversified foreign-reserve portfolio provides additional liquidity buffers.