“Singapore dollar-denominated assets have benefited from de-dollarisation flows over the past few months” and will continue to do so, said Peerampa Janjumratsang, a portfolio manager for Asia fixed income at M&G Investments in Singapore, even as the city-state’s bonds hedged back to dollars currently look “expensive compared to Treasuries.”
Hedged Singapore government bonds are the most expensive versus US peers in at least four years as investors seek safe-haven alternatives to American assets.
Investors have largely shrugged off the negative yield differential, still favouring the city-state’s AAA credit and robust onshore liquidity amid rising concerns over fiscal sustainability in the US. Using cross-currency swaps, a dollar-hedged 10-year Singapore dollar bond will yield around 4.15%, nearly 10 basis points lower than the 10-year US Treasury. This discount was as much as 20 basis points in mid-July — the widest in data back to May 2021.
