Between end-June and end-September the yield curve for local currency (LCY) government bonds in Singapore shifted downward across all maturities. Furthermore, the curve flattened as yields dropped more at the belly and the long-end of the curve than at the short-end. During the month of October, yields rose slightly higher across all maturities, but are still below end-June levels. Between end-June and end-October, yields for the 3- and 12-month tenors dropped 3 basis points (bps) and 14 bps, respectively, while yields from the belly to the long-end of the curve fell between 17 bps and 63 bps. The yield spread between 2- and 10-year maturities at end-October was about the same as the spread of 149 bps at end-September, but narrower than the spread of 188 bps at end-June.

The total amount of outstanding LCY bonds increased 11.2% y-o-y to SGD242.9 billion US$185.4 billion) at end-September. Outstanding Singapore Government Securities (SGS) bills and bonds  rose 5.8% y-o-y to SGD135.5 billion. However, on a quarter-on-quarter (q-o-q) basis, outstanding LCY bonds fell 0.8% in 3Q11, with government bonds declining 3.7% as SGD6.8 billion worth of SGS bonds matured in July against only SGD3.8 billion of new issuance in July–September. Issuance of SGS bonds dropped 15.6% y-o-y and 26.9% q-o-q in 3Q11.

The Monetary Authority of Singapore (MAS) released new capital rules for banks in Singapore that exceed the levels established under the Basel III agreement. Effective 1 January 2015, MAS will require Singapore-incorporated banks to have a minimum common equity Tier 1 capital adequacy ratio (CAR) of 6.5%, a Tier 1 CAR of 8.0%, and a total CAR of 10.0%. In addition, MAS will require Singapore incorporated banks to meet the minimum capital adequacy requirements of Basel III by 1 January 2013, which is 2 years ahead of the Basel Committee’s 2015 timeline. MAS plans to adopt Basel III’s capital standards to improve the consistency, transparency, and quality of the capital base, and to strengthen the risk coverage of capital rules for banks.