SGD bond yields now highest since 1988.

by

SGD bond yields now highest since 1988. https://www.channelnewsasia.com/singapore/yield-6-month-t-bill-hit-419-latest-auction-highest-1988-3028411

Yesterday newly issued SGD Treasury Bill closed at 4.19%.

SGD interest rates now higher than peak 2008.

Earlier this month, HDB announced a 5Y bond with coupon at 4.09%. This is the highest coupon HDB bond in my records, and I have even included those that has already matured.

All this are good if you have money. If you are borrowing, its certainly bad news.

Typical bank mortgage rate is 3M SORA + 1.00% p.a. 3 month SORA is now 3.72%. Many will be paying above 4%.

Maybank margin financing now at 3.5%. This cannot stay for long. It will soon increase to higher than SG Treasury rates and SORA rates. There is no free meal.

We have not read much from local news about pain from the man in the street. It will soon come.

Is time to buy bonds?

If AAA bonds straight bond pays 4%, I will need a BBB straight bond to pay me 6%. BBB perps will have to pay me 7.5%. Unfortunately, I dont see any. And companies are now not issuing new bonds in this high interest rates environment.

Is it time to buy shares?

With the risk free rate at 4%. To buy shares, I will demand a dividend of at least risk free rate + 3%. This is the minimum. Top grade reits are paying 5% to 6%. Its not enough. Local banks are paying about 4.5%. Also not good enough for me.

For the time being, I will rather put my money into Ah Gong’s risk free investment at about 4% returns. Till returns in the market catch up.

  • I'm a remisier with Maybank Securities, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please open a trading account to become my client; It's free!