2026 SGD Bond Market Outlook: Finding Stable Income in a Low-Yield World

Amid moderating global growth and trade-related uncertainties, Singapore bonds continued to provide a degree of stability in 2025. Singapore government and SGD corporate bonds have delivered total returns of 8.3% and 6.7%, respectively in 2025.

SGD bond issuance remained strong in 2025 as issuers took advantage of lower benchmark rates. Demand also stayed robust, driven by the ongoing search for yield. We expect a supportive demand-supply environment, with new issuances likely well absorbed, helping to support SGD bond prices going forward.

With Singapore benchmark rates having declined significantly this year, we expect rates to remain low, though the room for further decline appears limited. We favor medium-term Singapore government bonds, where we see greater value as the yield pickup is more meaningful.

SGD corporate bonds continue to remain a durable source for higher income, particularly for hold-to-maturity strategies. Within financials, Tier 2 SGD bank bonds appear attractive. Among non-financials, we prefer bonds from issuers with stable or improving credit profiles with spreads that are wider than peers.

Riding the Wave: Singapore’s 2025 Rate Story

Singapore’s benchmark rates shifted decisively in early 2025. After cresting in mid-January, benchmark rates began a measured descent, moving largely in step with major non-US central banks as policy easing gathered pace globally. That downward drift carried through much of the year before the narrative shifted again in the final quarter. In 4Q25, Singapore’s benchmark rates edged higher as markets grew less convinced about the depth and speed of future rate cuts — particularly from the US Federal Reserve — prompting a recalibration of expectations.

Over the course of the year, Singapore’s policy benchmark — the SORA Overnight Indexed Swap (SORA-OIS) curve — eased lower in a measured fashion, led by a pronounced decline across short-term yields. Six-month SORA fell by nearly 150 basis points, while the 10-year slipped by close to 51 basis points, leaving the curve steeper by year-end (Chart 1).

Domestic government bond yields followed the same rhythm, though the pace of decline varied along the curve. Short-term yields led the move, falling most sharply as the 6-month Singapore Treasury Bill cut-off yield dropped by around 143 basis points (“bps”) over the year, reflecting the pricing in of greater rate cut expectations (Chart 2). Gradually, the adjustment also rippled through the curve with the 5-year Singapore government securities (“SGS”) yields easing by around 97bps to 1.84%, while 10-year yields softened by around 66bps to 2.22% over the same period (as of 31 December).

Chart 1: SORA-OIS rates have declined drastically in the first three quarters of 2025

Chart 2: Falling benchmark rates drove government bond yields lower

Singapore bonds posted resilient returns, outperforming Asian peers

Against a backdrop of moderating global growth and trade-related uncertainty, Singapore bonds continued to provide a degree of stability in 2025. AAA-rated Singapore government bonds delivered a 8.3% total return (as measured by the Markit iBoxx ALBI Singapore Govt. TR Index in SGD terms) (Chart 3), despite a more subdued performance in 4Q25 when yields edged higher. The strong return was largely driven by the steep decline in benchmark yields throughout the year, generating significant mark-to-market gains and markedly outpacing last year’s modest annual return of 2.3%.

SGD-denominated corporate bonds followed a similar trajectory, delivering a 6.7% total return (measured by the Markit iBoxx SGD Corporates TR Index in SGD terms) (Chart 3), supported by a combination of gradually tightening credit spreads and a lower rates backdrop. In contrast to broader Asian credit markets, where trade developments contributed to greater credit spread volatility, SGD corporate bonds experienced a comparatively steadier return profile and modestly outperformed the regional benchmark, which returned 5.6% over the same period (measured by the Markit iBoxx Asian USD Dollar Bond – SGD Hedged Index).

We believe the steadier return profile observed in the Singapore corporate bond market was partly due to structural characteristics, including relatively lower liquidity, which helped moderate price fluctuations to a certain extent. In addition, the universe of SGD corporate issuers has remained broadly resilient despite ongoing trade-related uncertainties. From a portfolio perspective, this reinforces the role of SGD bonds as a source of stability and diversification within Asia-focused fixed income allocations, particularly for investors seeking to manage risk while maintaining income exposure.

Chart 3: Singapore bonds have outperformed Asian peers in 2025

Demand-supply backdrop to support SGD bond prices in 2026

SGD bond issuance remained firm in 2025, as issuers were quick to respond when benchmark rates moved lower, utilizing the opportunity to refinance their balance sheets and secure funding through the bond market. Nearly 150 new issues came to market over the year, lifting total issuance to around SGD 30.9bn — slightly above 2024 levels (Chart 4). Financial institutions continued to account for the largest share of supply, with global banks and insurers issuing predominantly long-dated subordinated debt to meet regulatory capital needs. Meanwhile, there were also more issuances from consumers, industrials, and the communications sector.

Looking ahead, the momentum for SGD issuance appears to remain robust. A supportive funding environment, coupled with market expectations of further Fed easing in 2026, gives issuers an incentive to access the bond market. At the same time, a softening global growth backdrop may nudge them to rely more actively on debt markets should revenue pressures rise.

On the demand side, investors remained undeterred. Demand for SGD bonds drew strength from sound issuer fundamentals, supported by a stable regional macro backdrop, and the appeal of a strong Singapore dollar. Based on our observation, investors’ demand was generally more pronounced for well-known global issuers and/or for issuances with more attractive initial pricing yield (typically in the high 3% yield range and above), highlighting the ongoing hunt for income. In a lower-yield world, the search for income has remained a consistent undercurrent - one that history suggests is unlikely to fade - and we expect this trend to continue moving forward.

Taken together, these dynamics point to a constructive supply–demand backdrop, with new bond issuances likely to be well absorbed by robust investor demand, helping to support SGD bond prices going forward. With issuance momentum likely to remain healthy, investors can also look forward to a widening array of bond opportunities in 2026.

Chart 4: SGD bond issuance remained firm in 2025, at around SGD 30.9bn

Singapore Sovereign bonds: Shifting focus to medium-term notes

The decline in Singapore benchmark rates throughout much of 2025 has largely mirrored movements in major non-US central banks, which have eased more aggressively than the Fed. With rates having fallen significantly this year, we expect Singapore rates to remain low, though the room for further decline appears limited. The pace of easing may also moderate as major central banks have signalled a willingness to slow or pause further cuts.

The sharp drop in 6-month T-bill yields has diminished their relative appeal, prompting a shift away from our previous outright preference. Meanwhile, the Singapore sovereign yield curve has steepened notably in 2025 (Chart 5), and we now see more value in medium-term SG government securities (“SGS”) where the yield pickup over short-term T-bills is more meaningful, with yields up to 75bps higher than 6-month SG T-bills. We recommend investors focus on medium-term SGS, which offers a more compelling risk-free income for a longer holding period.

Beyond the 10-year tenor, incentives to extend duration remain limited. The Singapore sovereign yield curve remains considerably flat (Chart 5), and tenors up to 30 years do not offer meaningful yield pickup for the added interest rate risk (up to 10 years in added duration). Investors seeking additional yield may instead consider selectively adding SGD corporate bonds. These can offer a more meaningful pickup, given a steeper corporate yield curve. While doing so may introduce credit risk, careful selection of high-quality issuers can help mitigate potential downside, offering a balanced approach to enhancing income.

Chart 5: Singapore’s sovereign curve has steepened in 2025, led by the short-end, but the long-end remains fairly flat

SGD corporate bonds: Source for durable income amidst falling yields

Credit spreads for SGD corporate bonds have tightened materially in 2025, a reflection of investors’ strong demand for income amid declining rates. Across the curve, most fixed-rate bonds now offer yields between 2% to mid-3% range. While absolute yields are now lower, SGD corporate bonds remain a reliable source of income for local investors.

Looking ahead, we continue to see SGD corporate bonds as a compelling hold-to-maturity option. Investors who entered the market at higher yields are now benefiting from higher, attractive income while, new investors can still capture a modest yield pickup over Singapore government bonds. Importantly, issuers have generally maintained decent credit fundamentals, providing reassurance amid ongoing trade uncertainties.

i) SGD Financial bonds – Value in Tier 2 SGD bank bonds

Yields for SGD bank bonds have dipped significantly over the past year, reflecting the strong demand and popularity amongst bond investors. Across the SGD bank issuances, yields for senior bonds (which sit higher on the seniority spectrum) have tapered off and are mostly trading around low to mid-2% across the curve (Chart 6). As such, we see continue to see better value in Tier 2 bank bonds, which are still offering attractive yield to next call of around mid 2% to low 3% across the curve. While Tier 2 bonds have a relatively longer tenor, we believe banks are incentivised to exercise the earlier call option to redeem and refresh their Tier 2 capital. Nonetheless, investors should note the loss-absorption feature across Tier 2 bonds.

In the table below, we have highlighted Tier 2 issuances that we find attractive, which offer relative value as they trade wider than peers (largely lie above the curve – chart 6). These are largely Tier 2 SGD bonds offered by French banks (BPCE, BNP Paribas, Credit Agricole) and HSBC with compelling yields and a broadly stable credit profile.

Chart 6: We see better value in Tier 2 SGD bank bonds

Table 1: Our recommended Tier 2 SGD bank bonds

Issues	Issuer	Ask Price	Yield to Maturity/ Call (%)	Years to Maturity/ Call	Bond Credit Rating (S&P/ Fitch)
BPCEGP 4.600% 21Jan2035 Corp (SGD)	BPCE SA	104.9	3.49/ 3.29	9.03 / 4.03	BBB / BBB+
BPCEGP 5.000% 08Mar2034 Corp (SGD)	BPCE SA	105.6	3.60/ 3.12	8.15 / 3.15	BBB / BBB+
ACAFP 3.950% 22Jul2032 Corp (SGD)	Credit Agricole SA	102.0	3.31/ 2.60	6.52 / 1.52	BBB+ / A-
ACAFP 4.250% 14Jan2035 Corp (SGD)	Credit Agricole SA	104.1	3.28/ 3.15	9.01 / 4.01	BBB+ / A-
ACAFP 5.250% 07Sep2033 Corp (SGD)	Credit Agricole SA	105.8	3.62/ 2.95	7.66 / 2.66	BBB+ / A-
BNP 3.125% 22Feb2032 Corp (SGD)	BNP Paribas	100.7	3.12/ 2.48	6.11 / 1.11	BBB+ / A-
BNP 4.750% 15Feb2034 Corp (SGD)	BNP Paribas	105.2	3.19/ 2.97	8.18 / 3.18	BBB+ / A-
HSBC 5.300% 26Mar2034 Corp (SGD)	HSBC Hldg	107.3	3.51/ 2.89	7.17 / 2.17	BBB+ / A-
Sources: Bondsupermart, iFAST Compilations. Data as of 12 January 2026.

ii) SGD non-financial bonds – Room for income opportunities

The SGD non-financial bond universe has experienced notable spread compression over the year, driven by a persistent search for yield. Nonetheless, yield dispersion remains meaningful, with most bonds trading in the mid-1% to 3% range across the curve (Chart 7), suggesting that selective investors can still uncover attractive income opportunities.

Against a backdrop of moderating global growth, our approach to SGD non-financial bonds remains issuer-specific, preferring issuers with stable or improving credit profiles and spreads that are wider than peers (higher yields) with comparable tenors. Among stable issuers offering moderate yields, we favour bonds from OUE REIT, OUE Limited, Shangri-La Hotel, and Equinix (Table 2), which trade at attractive spreads relative to peers. For investors seeking higher-yielding opportunities, we favour bonds from Thomson Medical Group, IREIT Global, Aspial Lifestyle, MoneyMax, and Wee Hur Holdings (Table 2), which offer compelling yields while maintaining credit profiles that we are comfortable with.

Chart 7: SGD non-financial bonds are trading with a wide yield dispersion, suggesting potential income opportunities for bond pickers

Table 2: Our recommended SGD non-financial bonds

Bonds	Issuer	Ask Price	Yield to Maturity (%)	Years to Maturity
OUECT 3.900% 26Sep2031 Corp (SGD)	OUE REIT	106.2	2.73	5.7
OUESP 4.000% 08Oct2029 Corp (SGD)	OUE Treasury	103.7	2.95	3.7
SLHSP 4.400% 01Aug2028 Corp (SGD)	Shangri-La Hotel	104.7	2.50	2.6
SLHSP 3.540% 17Jun2032 Corp (SGD)	Shangri-La Hotel	103.3	2.98	6.4
EQIX 3.500% 15Mar2030 Corp (SGD)	Equinix Asia Financing Corp.	101.3	3.16	4.2
EQIX 2.900% 15Sep2032 Corp (SGD)	Equinix Asia Financing Corp.	97.5	3.33	6.7
QNMSP 3.950% 10Jul2028 Corp (SGD)	Q&M Dental Group	101.0	3.53	2.5
TMGSP 4.650% 29Oct2029 Corp (SGD)	Thomson Medical Group	102.8	3.87	3.8
TMGSP 5.500% 31May2028 Corp (SGD)	Thomson Medical Group	104.1	3.68	2.4
TMGSP 5.250% 13May2027 Corp (SGD)	Thomson Medical Group	102.5	3.34	1.3
IREGLB 6.000% 22May2028 Corp (SGD)	IREIT Global	103.5	4.42	2.4
MSFSSP 5.100% 29Oct2029 Corp (SGD)	Aspial Lifestyle	101.1	4.78	3.8
MMFSSP 5.000% 30Oct2028 Corp (SGD)	MoneyMax Treasure	101.0	4.61	2.8
WHURSP 4.800% 04Nov2030 Corp (SGD)	Wee Hur Holdings	101.3	4.50	4.8
Sources: Bondsupermart, iFAST Compilations. Data as of 12 January 2026.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in BNP 4.750% 15Feb2034 Corp (SGD), HSBC 5.300% 14Mar2033 Corp (SGD), QNMSP 3.950% 10Jul2028 Corp (SGD), TMGSP 4.650% 29Oct2029 Corp (SGD), TMGSP 5.500% 31May2028 Corp (SGD, )and the analyst who produced this report holds a NIL position in the abovementioned securities.

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2026 SGD Bond Market Outlook: Finding Stable Income in a Low-Yield World

Riding the Wave: Singapore’s 2025 Rate Story

Chart 1: SORA-OIS rates have declined drastically in the first three quarters of 2025

Chart 2: Falling benchmark rates drove government bond yields lower

Singapore bonds posted resilient returns, outperforming Asian peers

Chart 3: Singapore bonds have outperformed Asian peers in 2025

Demand-supply backdrop to support SGD bond prices in 2026

Chart 4: SGD bond issuance remained firm in 2025, at around SGD 30.9bn

Singapore Sovereign bonds: Shifting focus to medium-term notes

Chart 5: Singapore’s sovereign curve has steepened in 2025, led by the short-end, but the long-end remains fairly flat

SGD corporate bonds: Source for durable income amidst falling yields

Chart 6: We see better value in Tier 2 SGD bank bonds

Table 1: Our recommended Tier 2 SGD bank bonds

Chart 7: SGD non-financial bonds are trading with a wide yield dispersion, suggesting potential income opportunities for bond pickers

Table 2: Our recommended SGD non-financial bonds

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