On 27 May, a new 10-year Singapore Government Security (SGS) was auctioned, which pushed yields of 10-years and longer above levels attained in November and December, and steepened the government’s yield curve, especially at the long end of the curve. The SGS bond market continues to be anchored by relatively conducive short-term interest rates as the 3-month Singapore interbank offered rate (SIBOR) is near record lows amid sufficient money market liquidity.

As of June 2009, the value of total local currency (LCY) bonds was SGD192 billion, which represented an increase of 1.9% y-o-y and a 5% quarter-on-quarter (q-o-q) increase. Outstanding government bonds were SGD116 billion in June, which rose by 6.9% on a quarter on quarter (q-o-q) basis after rising by 3.4% in March. At end-June, corporate bonds outstanding amounted to SGD76.5 billion, rising 2.2% q-o-q.

Monthly data shows that government bond trading volume rose significantly in January to SGD42 billion from SGD25 billion in December. The turnover ratio also rose in January to 0.41 from 0.24 in December. For the succeeding 2 months, trading volume fell to SGD32 billion in February and SGD22 billion in March, with corresponding declines in turnover ratios to 0.31 in February and 0.21 in March. Trading volume was slightly higher in April and May at SGD24 billion and SGD23 billion, respectively. The turnover ratio remained mostly steady in April and May at 0.22 and 0.21, respectively. In June, the trading volume rose to SGD28 billion, its highest over a 4-month period and the turnover ratio picked up at 0.25.

On 7 May 2009, MAS issued a set of Guidelines on the Application of Banking Regulations to Islamic Banking. The guidelines consolidated the previous regulations and clarifications issued by MAS, and offered specific information on the regulatory treatment of various Islamic structures. The guidelines will provide greater clarity and certainty for financial institutions offering Islamic banking products in Singapore.