How Auctions Are Conducted
Singapore Government Securities (SGS) bonds, Treasury Bills (T-bills), Cash Management Treasury Bills (CMTBs), MAS Bills and MAS Floating Rate Notes (FRN) are issued via auctions, which are held according to the annual issuance calendar. Find out how the auction process works.
Each SGS (comprising SGS bonds, T-bills and CMTBs), MAS Bills or MAS FRN auction follows several steps: announcement, auction, results and issuance. The relevant dates for all auctions are published in the .
When: SGS bonds and T-bills – 5 business days after the announcement; CMTBs, MAS Bills and MAS FRN – 1 business day after the announcement
All bids need to be submitted by noon on auction day.
- Underwriting Requirement
- Yes. Each primary dealer is obliged to tender for an equal share of the issue on offer.
- Post-auction Subscription
- Cut-off Time
- By noon on auction day.
Note: For individual investors, applications for SGS through ATMs and internet banking typically close 1 to 2 business days before the auction. Check with your bank for the exact cut-off time.
- When-issued Trading
- Coupon Payments for SGS Bonds and MAS FRN
- Every 6 months, starting from the month of issue. Paid on the first business day.
When: About 1 hour after the auction
The auction results include information such as:
- Average and cut-off prices and yields/spreads.
- Percentage of applications allotted at cut-off.
- Total amount of the security applied for and allotted.
When: SGS bonds, T-bills, MAS Bills and MAS FRN - 3 business days after the auction; CMTBs – 1 business day after the auction
SGS, MAS Bills and MAS FRN are scripless.
For individual investors, your holdings will be reflected:
- For cash applications, in your CDP statement.
- For SRS application, in the statements from your SRS Operator (DBS/POSB, OCBC and UOB are SRS operators).
- For CPFIS-OA application, in the CPFIS statement sent by your agent bank (DBS/POSB, OCBC and UOB are CPFIS agent banks).
- For CPFIS-SA application, in your CPF statement.
For institutional investors, your holdings will be reflected in your custody account.
SGS bonds and T-bills auctions are open to all institutions and individuals, including non-residents.
- There are three categories of SGS bonds – SGS (Market Development), SGS (Infrastructure), and Green SGS (Infrastructure). MAS may participate in SGS (Market Development) auctions on a non-competitive basis. The SGS (Market Development) purchased is used in money market operations via repos.
- Any amount that MAS plans to apply for is announced to the market before each auction. In addition, MAS may increase or decrease the amount it purchases based on the auction safeguard mechanism.
CMTBs, MAS Bills and MAS FRN auctions are open to institutional investors only.
SGS, MAS Bills and MAS FRN are issued via a uniform-price auction. Successful bids will be allotted the securities at a uniform yield, which is the highest accepted yield (or cut-off yield) of successful competitive bids submitted at the auction.
Refer to the following table to find out the bid type(s) accepted at each auction.
|SGS bonds||T-bills||CMTBs||MAS Bills||MAS FRN|
In a non-competitive bid, you only specify the amount you want to invest, not the yield. Choose this if you wish to invest in the bond regardless of the return or are unsure of what yield to bid.
Non-competitive bids will be allotted first, up to 40% of the total issuance amount. If the amount of non-competitive bids exceeds 40%, the bond will be allocated to you on a pro-rated basis. The balance of the issue amount will be awarded to competitive bids from the lowest to highest yields.
You will get the bond at the cut-off yield, which is the highest accepted yield of successful competitive bids.
If you wish to invest in the bond only if it yields above a certain level, submit a competitive bid. You can specify the yield you are willing to accept in percentage terms, up to 2 decimal places.
Note that you may not get the full amount that you applied for, depending on how your bid compares to the cut-off yield.
Tip: A lower yield represents a more competitive bid, as you are indicating that you will accept a lower interest rate. You can submit multiple competitive bids.
For each SGS auction, the following allotment limits apply:
- Each primary dealer will be allotted a maximum of 30% of the issuance size. This includes the allotment under competitive and non-competitive bids.
- Each non-primary dealer will be allotted a maximum of 15% of the issuance size. This includes the allotment under competitive and non-competitive bids.
A maximum of 40% of the issuance size will be allotted to non-competitive bids. If the total amount of non-competitive bids exceed this limit, the allotment will be on a pro-rated basis. In addition, the following limits will apply:
- For each primary dealer, the maximum allotment for non-competitive bids is 1% of the issuance size.
- For each non-primary dealer, the maximum allotment for non-competitive bids is:
o S$2 million per SGS bond application;
o S$1 million per T-bills application.
- If a primary dealer enters a bid on behalf of a client, the client is subject to the non-primary dealer limit of S$2 million per SGS bond application or S$1 million per T-bills application.
Allotment limits are not imposed on MAS Bills and MAS FRN auctions.
Although SGS bonds auctions are fully underwritten by primary dealers, the SGS market is not immune from global developments.
The auction safeguard mechanism allows MAS to vary its subscription amount to offset unexpected changes in investor demand. This makes the SGS bonds auction system more resilient.
How it Works
The auction safeguard mechanism takes place when the auction cut-off yield is more than 25 basis points below or above the market yield.
If that happens, MAS may subscribe for a lower amount in an unexpectedly strong auction, or a higher amount in an unexpectedly weak auction.
The auction safeguard thus helps to lower the risk of volatility or disorderly adjustments in the secondary SGS and broader Singapore dollar corporate debt markets.
The coupon rate for a newly issued SGS bonds is the cut-off yield of successful competitive bids rounded down to the nearest 0.125%. The minimum coupon rate for SGS bonds will be 0.125%.
If the cut-off yield is higher than the coupon rate, the purchase price would be lower than 100% of the bid amount. The difference would be credited back into the individual investor's account.
Conversely, if the cut-off yield is lower than the coupon rate, the purchase price is higher than the bid amount, and the difference is debited from the account.
For CMTBs, T-bills and MAS Bills, there are no coupon payments; instead they are issued at a discount to the face (par) value. The discount rate is the cut-off yield at the auction. The interest is paid at maturity and is the difference between the purchase price and the face value.
For MAS FRN, the coupon rate is the cut-off spread of successful competitive bids added to the relevant Compounded SORA calculated based on the interest calculation methodology. The coupon rate is floored at 0%.
MAS FRN will follow a 2-day backward shifted observation period methodology for calculation of interest. Under this convention, the observation period for the interest rate calculation starts and ends two business days prior to the interest period. The applicable day count for SORA will also be adjusted back by two business days.