Singapore government bonds are trouncing developed-market peers, and the rally may have legs as ample liquidity and limited supply continue to weigh on yields.

The securities have returned 6.4% in the first half, outperforming 22 major-market peers. Singapore’s yields have plummeted, with spreads deeply negative relative to Treasuries.

“Singapore government securities may continue to hold appeal due to ample Singapore dollar liquidity conditions, regional haven demand status and only modest bond supply,” said Winson Phoon, head of fixed-income research at Maybank Securities Pte.

Singapore 10-year yields are around 210 basis points below similar-dated Treasuries, 2.2 standard deviations below the five-year average. Singapore dollar onshore liquidity has remained ample. The three-month Singapore Overnight Rate Average rate, the de facto standard, is around 1.8% — about 100 basis points below the one-year average.

“Singapore government bonds stand to benefit from safe-haven flows,” Oversea-Chinese Banking Corp.’s Frances Cheung wrote in a note Thursday. Since the government doesn’t need proceeds from the borrowings to fund expenditures, it has flexibility in issuance around prevailing market conditions, she added.