Singapore bond market stable as corporate issuances near S$28bn
MAS Deputy Chairman Chee Hong Tat confirmed borrowing costs align with historical levels, despite US Treasury yield fluctuations, with S$28 billion in corporate bonds issued so far this year.
Singapore's Borrowing Costs Remain Stable
Monetary Authority of Singapore (MAS) Deputy Chairman Chee Hong Tat stated on Wednesday (7 October) that Singapore's borrowing costs align with historical levels. This stability persists despite fluctuations in US Treasury yields.
Chee, who also serves as Minister for National Development, noted that Singapore's interest rates have not increased as much as those in other jurisdictions. He attributed this to the city-state's strong fiscal position and the confidence investors place in its bond market.
The government is closely monitoring developments in the US and other major markets, as these influence local borrowing costs and interest rates, Chee added.
Corporate Bond Volume and Government Securities
Singapore-dollar corporate bond issuances have been well-received, reaching approximately S$28 billion in the year to date, Chee Hong Tat reported. These issuances are on track to surpass the total volume from 2025. Chee also detailed that the prevailing 10-year Singapore Government Securities (SGS) yield stands at 2.5 per cent.
This compares to its 10-year average of about 2.2 per cent. The discount between the 10-year SGS and 10-year US Treasury yields expanded from around 170 basis points (bps) in January 2025 to approximately 250 bps by September 2026, Chee stated.
Domestic Credit Conditions and Household Safeguards
Domestic credit conditions in Singapore remain conducive, Chee Hong Tat confirmed. The three-month compounded Singapore Overnight Rate Average (SORA), a key benchmark for local loans, is about 1.2 per cent, below its 10-year average of 1.5 per cent, he noted.
MAS stress tests indicate that businesses and households generally maintain sound financial positions to manage higher borrowing costs. Chee highlighted MAS safeguards for housing loans, such as the total debt-servicing ratio (TDSR) and mortgage-servicing ratio (MSR) frameworks.
Banks assess housing loan affordability at a 4 per cent interest rate, even when prevailing mortgage rates are lower, Chee explained.
Singapore's sustained bond market stability offers a reliable environment for capital raising, particularly for companies seeking Singapore-dollar financing. The continued investor confidence, alongside MAS's diversified official foreign reserves portfolio, provides liquidity and mitigates market stress.
Businesses can expect domestic borrowing costs, as reflected by the three-month SORA, to remain below their long-term average for now. This could support investment decisions and expansion plans, especially compared to jurisdictions with more volatile rate environments. The MAS's proactive monitoring of global markets suggests any future shifts will be managed with existing policy tools.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
Comments.
Comments are moderated. We remove what is unlawful, abusive or off-topic, and and you remain responsible for what you post.
Reader comments open soon. Until then, corrections and responses go to our newsroom, and we publish what we get wrong on Corrections.