T-Bill Rates, Auction Dates & More

Are you not so keen on parking your cash for 10 years in the Singapore Savings Bond (SSB) or Singapore Government Securities (SGS) bonds for the full tenor?

Or are you looking for an alternative to fixed deposits?

Enter treasury bills (T-bills) with short maturities of only six months or one year and the same backing of the Singapore Government, well-known for its high credit (AAA) rating.

You’ll also receive a fixed interest payment upfront, and you can invest with cash, Supplementary Retirement Scheme (SRS), or Central Provident Fund (CPF) funds with no overall limit.

Here’s all you need to know.

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TL;DR: T-Bill Singapore Guide — Treasury Bill Rates, Auction Dates & More

The previous 6-month Singapore T-bill (BS23125H) offered a yield of 3.73% p.a. in the auction held on 20 December 2023. ~90% of non-competitive applications were allotted.

The next and last 6-month Singapore T-bill (BS24100F) of the year will open today (27 December 2023), and the auction will be held next Thursday (4 January 2024).

Click to Jump:

Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any investment product. Note that the information is accurate as of 27 Dec 2023.

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T Bill Auction Updates

Historical Cut-off Yield

The interest rate for T-bills changes every month and is only determined at the auction. So here’s a look at the upcoming auctions:

6-Month T Bill Singapore (4 Jan 2024 Auction)

Source: MAS

1-Year T Bill Singapore (19 Oct 2023 Auction)

Source: MAS

Individual investors can submit bids for SGS through selected banks’ ATMs and Internet banking portals. Applications through these channels may close one to two business days before the auction, and individual investors should check with their banks on the exact cut-off time.

Dates: Where the issue/settlement date, coupon payment or redemption date, or closing date of the application specified above falls on a day that the electronic payment system, established by the Monetary Authority of Singapore, is not in operation, issuance/settlement, coupon payment, redemption, or the close of application, as the case may be, will be effected on the next business day when the electronic payment system is in operation.

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What is a Treasury Bill?

Treasury bills (T-bills) are government bonds that pay a fixed interest rate and have six-month or one-year maturities, with the 6-month T-bill being the most common.

Unlike SGS bonds, however, you are not paid with coupons. Instead, you buy T-bills at a discount to the face (par) value and are given the full value at maturity.

The 6-month T-bills are typically issued every two weeks, while the 1-year T-bills are issued every quarter, according to the issuance calendar on the MAS website.

The minimum application is $1,000, while the maximum application is up to $1,000,000 per applicant.

Do T-bills Pay Monthly?

In other words, if I were to buy a 6-month T-bill worth $10,000 with a yield of 3% p.a., I would only need to pay $9,850 upfront. Thus, they do not pay monthly.

At the end of the tenor, I will receive the full $10,000 worth (back into my bank, CPF, or SRS account) and would have earned $150.

MAS T-Bill Rates Are Only Revealed at the Auction

The big caveat is that you will only know the actual interest rates after announcing the auction results. Unlike SSBs, where MAS will tell us the exact interest rate we will get, T-Bills are auctioned, and the yields are determined then.

Historical Rates

Luckily, we can roughly estimate the rates by looking at historical data from the MAS website!

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Are T-Bills a Good Investment?

Before we dive into how to buy T-bills, let’s take a closer look at what investing in them means for us and how it differs from SSBs and SGS bonds.

Why Does The Government Offer T-Bills?

According to MAS, the Government issues SGS bonds and T-bills primarily to:

• Build a liquid SGS market to provide a robust government yield curve, which serves as a benchmark for the corporate debt market
• Grow an active secondary market for cash transactions and derivatives to enable efficient risk management
• Encourage issuers and investors, both domestic and international, to participate in the Singapore bond market.

If you didn’t understand any of that, T-bills essentially serve as a way for you to lend the Singapore government money so that they can develop the local debt markets.

How Do I Withdraw Money From T-Bills?

Investors are not able to redeem T-bills early. However, you may sell your T-bill on the secondary market at DBS, OCBC, or UOB’s main branches.

That said, the price of the T-bill may rise or fall before maturity, and the trading volume for T-bills is low, making them relatively illiquid. So be sure you are okay with locking up your money for the duration of the tenor!

Are T-Bills Risk-Free?

T-bills are wholly backed by the Singapore Government, which has a “AAA” credit rating.

This reduces the risks of investing in T-bills to the bare minimum (read: there are still risks).

Singapore is one of only 11 countries that enjoy the “AAA” credit rating by Standard and Poor (S&P), as in the folks behind the S&P 500 index! Some other countries that have this rating include Switzerland, Australia, and Finland.

Such a strong rating arguably makes the T-bills one of the safest products in the market.

The only way you will lose all your money is if the Singapore Government defaults, which has never happened!

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T-Bills vs SSB vs SGS Bonds: What Are The Differences?

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How Do I Buy T-Bills in Singapore?

Before applying, make sure you have the following:

• A bank account with any local banks in Singapore (DBS/POSB, OCBC, or UOB)
• Central Depository (CDP) account that is linked to the bank account you intend to invest with
• A CPF Investment Account with one of the three CPFIS agent banks (DBS/POSB, OCBC, and UOB) for CPFIS-OA investments (no account needed for CPFIS-SA investments).
• An SRS account if you are using funds from your SRS.

How Do I Apply For T-Bills?

Cash

You can apply for a T-bill through two methods:

1. Apply at an ATM (only DBS/POSB, OCBC, or UOB) near you OR
2. Apply through Internet Banking under “Singapore Government Securities”.

Note that the $2 transaction fee (excluding GST) is waived if you apply through DBS.

SRS

Apply through the internet banking portal of your SRS Operator (DBS/POSB, OCBC, or UOB)

CPFIS: Can I Use My CPF To Buy T-Bills?

Submit an application in person at the main branch of your respective CPF Investment Scheme (CPFIS) agent bank (DBS/POSB, OCBC, or UOB).

For DBS, OCBC and UOB customers, you may also apply for T-bills using your CPF-OA funds online via i-banking under “Singapore Government Securities”.

Do note that agent banks charge a one-time fee of $2.50 (excluding GST) per transaction and a quarterly $2 service fee (excluding GST) per counter. A T-bill investment using your CPF Ordinary Account will incur a total cost of $6.50 or $7.02 after the prevailing GST of 8%.

Read More

How to Apply for Older T-Bills

Dealer Banks (Secondary Market)

Aside from bidding at a T-bill auction, you can also buy T-bills with primary dealer banks (DBS/POSB, OCBC, or UOB). This allows you to buy older T-bills for an even higher return!

What Is a Competitive Bid and a Non-competitive Bid?

As you apply for new T-bills, you will have the option of a “non-competitive” and “competitive” bid.

Non-competitive Bid

A non-competitive bid does not specify the yield. Instead, you only specify the amount you want to invest, and those funds will be invested regardless of the yield. This is the option that the average Singaporean should go for.

Non-competitive bids will be allotted first, up to 40% of the total issuance amount. If the amount of non-competitive bids exceeds 40%, the bond will be allocated to you on a pro-rated basis.

This is the option that I recommend for most people, as you won’t need to deal with placing competitive bids.

Competitive Bid

On the other hand, a competitive bid is usually for institutional investors or the more investment-savvy, where investors will bid for their desired yield.

Opting for a competitive bid means that your funds will only be invested if the cut-off yield exceeds your specified yield.

Do note that you may not get the full amount that you applied for, depending on how your bid compares to the cut-off yield :

• If your bid is lower than the cut-off yield, you will get an allotment of what you bid
• If your bid is equal to the cut-off yield, your allocation amount might be lower as the allocation is pro-rata
• If you bid above the cut-off yield, you will not be allocated.

The balance (60%) of the total issue amount will then be awarded to competitive bids from the lowest to highest yields.

In essence, everyone will get the cut-off yield so long as your (competitive) bid does not exceed the cut-off yield!

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How to Sell T-Bills

Since you cannot redeem T-bills early, you may consider selling your T-bills through dealer banks (DBS/POSB, OCBC, or UOB).

But remember, the bond price may rise or fall before maturity, so you could lose some capital if you were to sell at a value below par value.

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How To Check T-Bills

Once you’ve applied for T-bills, the waiting game begins!

You will be issued T-bills three days (T+3) after the auction.

You may view your purchases or sales of T-bills at the respective platforms based on your purchase method.

How To Check T-Bills in Your CDP Account

Your successful T-Bills allotment paid for in cash will be reflected in your CDP statement (NOT SGX!):

If you have purchased $6,000 worth of T-bills, for example, you will be allocated a quantity of 60 units, with each unit worth $100.

So don’t panic if you’ve put in $10,000 and only see a quantity of 100!

T-bills Application for CPF and SRS

SRS application: Statements from your SRS Operator (DBS/POSB, OCBC and UOB are SRS operators).

CPF-OA application: CPFIS statement sent by your agent bank (DBS/POSB, OCBC and UOB are CPFIS agent banks).

CPF-SA application: CPF statement.

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FAQ: T-bill Allocation and More

I Made a $10,000 Non-Competitive Bid With Cash and Received a Refund of $5,075 in My Bank Account. What’s Going On?

In this scenario, only $5,000 worth of T-bills was successfully applied, with the additional $75 being the interest earned.

This means that the cut-off yield for this round is at 3% per annum. If you’ve only received a partial allocation, this means that the T-bill you applied for was oversubscribed.

I’ve received the T-bill refund, but my CDP account does not reflect my T-bill holdings.

As T-bills are currently oversubscribed, it may take some time for MAS to process the information, resulting in a delay on your CDP account.

No need to worry and be patient for the holdings to appear.

Can I Submit Multiple Bids at the T Bills Auction?

Yes, you can! Additional bids will not overwrite your previous submission.

If I submit a competitive bid, will I get the cut-off yield or the bid I submitted if the cut-off yield is higher?

You will get the cut-off yield if you’ve submitted a bid lower than the cut-off yield.

Will T-bills Interest Rates Increase in the Future? How Much Interest Do T-bills Pay?

T-bills have recently become popular, resulting in high demand and oversubscription. On top of that, some people have spoiled the market by submitting very low competitive bids to get fully allotted while enjoying a higher interest rate.

As a result, the T-bill interest rates have been fluctuating recently.

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Are T-bills Right For Me?

If you are an investor who wants to invest for a short period (i.e. 6 months or one year), T-bills are a great and safe way to park your spare cash.

For the past year or so, we have seen the median yield of T-bills with yields of 3.64% to 4.40%,

How Is T Bill Interest Calculated? Does the Interest Compare to Bank Rates?

With the latest 6-month T-bill giving 3.73% p.a., T-bill interest rates are more competitive compared to fixed deposits:

But they are not better than the savings accounts offered by banks, although the rates offered by banks are not fixed:

That said, the interest rates are only determined at the auction, and if there is another oversubscription, you can expect interest rates to fall further and only a partial allocation.

For those of us who want to invest for the long term (i.e. five to 10 years), consider investing in SSBs or SGS bonds instead!

Do note that with the headline inflation rate predicted to be 4.5% to 5.5% in 2023 by the MAS, you’re still facing a tough battle.

So, if you have a long investment horizon, check out our piece about why you shouldn’t play it too safe as a long-term investor:

Should You Invest in T-bills Now?

Since the Fed has paused interest rate hikes for 2023, T-bills might not rise further.

Alternatively, you can build a bond ladder and dollar-cost-average into T-bills with each issuance.

To help you make a better decision, check out the T-bills’ benchmark yields here.

Upcoming T Bill Singapore Auctions

Sometimes, we may also miss out on T-bill auctions, so it’s good to set a calendar reminder. Over at r/SingaporeFI, user “D2GCal”, has blessed us with a Google calendar for 2023 and 2024’s T-Bills:

If the current and last T-bill for 2023 (SGXZ14870752) doesn’t look attractive to you, here are the next T-Bill auctions for 2024:

6-Month T-Bill Calendar 2024

1-Year T-Bill Calendar 2024

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