Market Summary

Yield Movements

Between 2 June and 29 August, local currency (LCY) government bond yields in Singapore fell an average of 61 basis points across the curve due to slower inflation and expectations of dampened economic growth. In the second quarter (Q2) of 2025, the economy grew 4.4% year-on-year (y-o-y), ticking up from an initial estimate of 4.3% y-o-y. The growth forecast for the last two quarters of the year, however, remains muted at only 1.5%-2.5%. On the other hand, consumer price inflation in July was 0.6% y-o-y, lower than 0.8% y-o-y in both May and June, but within the inflation forecast of 0.5%-1.5%.

Local Currency Bond Market Size and Issuance

At the end of June, Singapore's outstanding LCY bonds rose a modest 0.6% quarter-on-quarter (q-o-q) to SGD872.1 billion, extending the previous quarter's 2.0% q-o-q expansion. Outstanding Treasury instruments and central bank bills exhibited growths of 0.7% q-o-q and 1.9% q-o-q respectively. On the other hand, outstanding corporate bonds fell 1.8% q-o-q, a reversal from the 0.7% q-o-q growth in the previous quarter, on reduced corporate issuance. Meanwhile, total LCY bond issuance grew 1.4% q-o-q in Q2 2025, driven by growths in Treasury and other government bonds (19.9% q-o-q) and central bank bills (0.1% q-o-q). Corporate issuance saw a large reduction (70.6% q-o-q) in Q2 2025 partly due to diminished expansionary plans caused by trade market uncertainties.

Sustainable Bond Market

In Q2 2025, outstanding sustainable bonds soared 5.4% q-o-q to USD28.0 billion, predominantly consisting of green bond instruments (84.6%). Total outstanding sustainable bonds were mostly denominated in Singapore dollars (83.3%). Bonds with tenors exceeding 5 years made up 59.7% of total outstanding sustainable bonds at the end of June, resulting in a size-weighted average tenor of 16.6 years.