The Complete Guide to Singapore Treasury Bills (T-Bills) [April 2024]

01 April 2024

In the fast-paced realm of financial investments, there exists a hidden gem that investors are flocking towards: Treasury Bills, also known as T-bills. These unassuming yet government-backed securities have quietly risen to prominence as a dependable conduit for fortifying your financial future within Singapore.

While bonus seasons typically spark dreams of exotic vacations, acquiring that coveted timepiece, or indulging in life’s luxuries, we advocate for a balanced approach: celebrate your hard-earned successes while simultaneously fortifying the foundation of your financial well-being. It’s a dual strategy that centres around putting yourself first – not just for today but for the unforeseen challenges that tomorrow may bring.

In this comprehensive guide, we’ll navigate through the intricate landscape of T-bills. We’ll unravel the nuances of how these financial instruments operate, elucidate why they’re steadily gaining recognition among investors, and equip you with the knowledge needed to make astute financial decisions.

What Are Singapore T-Bills?

Singapore T-bills are short-term investments that bear complete government backing, ensuring unparalleled security. With typical maturity periods spanning either 6 months or 1 year, T-bills present a viable alternative to their longer-term counterparts, such as Singapore Government Securities Bonds (SGS Bonds) that have a maturity of 2 to 30 years.

One distinctive characteristic of T-bills sets them apart: the absence of periodic coupon payments. Instead, investors accrue returns via the difference between the purchase price and the face value upon reaching maturity. This straightforward structure makes T-bills especially appealing to those who prefer simplicity in their investments.

Investing in Singapore T-Bills

The draw of Singapore T-bills lies in their remarkable fusion of safety, liquidity, and competitive yields. As government-backed instruments, T-bills are widely regarded as one of the safest investment options available. Their short-term nature ensures that your capital isn’t tied up for extended durations, affording you easy access to your funds whenever the need arises. Moreover, their yields have gained increasing competitiveness courtesy of a recent surge in interest rates.

The latest auction held on Mar 20, 2024, for the 6-month T-bill in Singapore yielded 3.8%. Let's look at the historical T-bills yield:

Auction DateT-billCut-off Yield
20 Mar 2024BS24106W3.80%
7 Mar 2024BS24105X3.78%
22 Feb 2024BS24104T3.80%
15 Feb 2024BS24103H3.66%
1 Feb 2024BS24102S3.54%
18 Jan 2024BS24101Z3.70%
4 Jan 2024BS24100F3.74%
20 Dec 2023BS23125H3.73%
7 Dec 2023BS23124S3.74%
23 Nov 2023BS23123Z3.80%
8 Nov 2023BS23122F3.75%
26 Oct 2023BS23121E3.95%  
12 Oct 2023BS23120A3.77%

Source: MAS

T-Bills vs. SGS Bonds

In the landscape of government-backed securities, investors often weigh the merits of T-bills against SGS Bonds. Both are attractive options but cater to different investment needs and preferences.

For one, T-bills typically mature in a year or less. This short duration usually translates to lower yields compared to longer-term investments. They are ideal for investors looking for a quick turnaround or a short-term place to park their funds. SGS Bonds, in contrast, are long-term investments, with maturities ranging from 2 to 30 years. The longer maturity of SGS Bonds generally offers higher yields, reflecting the extended commitment and increased interest rate risk over time.

Moreover, T-bills are issued at a discount and do not pay periodic interest. SGS Bonds pay semi-annual interest, offering a steady income stream to investors. This feature can be particularly appealing to those who need regular income, like retirees.

SGS bondsT-bills
Available tenor2, 5, 10, 15, 20, 30 or 50 years6 months or 1 year
Type of SecurityLong-term debt instrumentShort-term debt instrument
Minimum investmentS$1,000S$1,000
Maximum investmentNoneNone
Buy using SRS and CPF funds?SRS and CPFSRS and CPF
Type of interest rate paymentFixed couponNo coupon, Issued and traded at a discount to the par value
How often interest is paidEvery 6 monthsAt maturity
Early redemptionNo early redemption at par, but available for secondary market tradingNo early redemption at par, but available for secondary market trading
Secondary market tradingAt DBS, OCBC or UOB main branches; on SGX through brokersAt DBS, OCBC or UOB main branches 

T-Bills vs. Fixed Deposits

Much like T-bills, fixed deposits represent safe investments that allow you to earn regular interest income. However, there are a few dissimilarities, specifically in their risk and return profiles, as well as liquidity and flexibility.

T-bills are considered one of the safest investment options as they are backed by the government. They typically offer a lower risk compared to other market investments. However, the returns on T-bills can fluctuate based on market conditions, especially in the secondary market. Fixed deposits, on the other hand, provide a fixed interest rate for the deposit term. The risk is minimal, and the return is predictable, making fixed deposits a preferred choice for those prioritizing stability over higher, variable returns.

T-Bills are highly liquid, especially since they can be traded in the secondary market. This means you can potentially sell your T-bills before maturity if you need access to your funds, though this could come with the risk of capital loss. Fixed deposits, while secure, generally lock in your money for the term of the deposit (3 months to 1 year). Early withdrawal often results in penalties or reduced interest, making them less liquid than T-bills.

Check out the latest fixed deposit rates here.

T-Bills vs. Cash Management Products

Cash management solutions encompass a variety of financial instruments and strategies aimed at efficiently managing cash resources. These solutions are designed to optimize liquidity, maximize returns, and preserve capital while meeting the short-term financial needs of investors. Among the array of cash management products available, Stashaway Simple Guaranteed stands out as a viable option for investors.

Stashaway Simple Guaranteed offers a range of tenor options from 1 month, 3 months, 6 months to 12 months, providing investors with flexibility to align their investment horizon with their financial goals. This diversity allows for tailored investment strategies that cater to individual liquidity needs. Moreover, Simple Guaranteed ensures fixed returns over the specified period, promoting capital preservation and offering a straightforward cash management solution. This feature may be particularly attractive to risk-averse investors seeking stability in their investment portfolios.

In contrast, T-bills, while government-backed and generally considered low-risk, may pose challenges in accessibility and lack certainty in interest rates at the point of subscription. This can potentially require more effort and expertise to purchase. Additionally, T-bills' returns are subject to market fluctuations, and the uncertainty regarding interest rates at subscription may deter investors prioritizing clarity and predictability in their investment decisions.

StashAway Simple Guaranteed Interest Rates (April 2024):

TenureInterest rate per annum
1 month3.5%
3 months3.75%
6 months3.6%
12 months3.5%

T-Bills vs. SSB

Let’s dive into another comparison often on the minds of savvy savers and investors: T-bills versus SSBs. Compared to T-bills, SSBs are unique because they are designed to be a long-term investment that offers you the flexibility to cash out without penalty. The interest rates on SSBs tend to increase the longer you hold them, making them a more attractive option for those who can afford to park their money for a bit longer. Plus, they’re also backed by the Singapore government, so they’re pretty safe, too.

Savings BondsT-bills
Available tenorUp to 10 years3/ 6/ 12 months
Frequency of issuanceMonthly, for at least 5 yearsFortnightly or quarterly, refer to the issuance calendar
Minimum investmentS$500, and in multiples of S$500S$1,000, and in multiples of S$1,000
Maximum investmentS$200,000 across all tranchesNone
Buy using SRS and CPF funds?Only SRSSRS and CPF
Type of interest rate paymentFixed coupon, steps up each yearNo coupon, issued and traded at a discount to the par value
How often interest is paidEvery 6 months, starting from the month of issueUpon maturity 
Secondary market tradingNoAt DBS, OCBC or UOB main branches
Early redemptionCan redeem your original principal investment amount and accrued interest in any monthNo early redemption at pat, but available for secondary market trading where prices are determined by mark

Risks and Considerations

While T-bills are often praised for their safety and reliability, it’s also important to understand the risks and considerations before diving in. Let’s unwrap this a bit.

Accessibility of T-bills Presents Post-Issuance Challenges

Once acquired, navigating the secondary market for Singapore T-bills can prove less straightforward. Unlike the initial subscription process, which can be conveniently executed online, buying or selling these securities before maturity can present hurdles.

To liquidate your short-term notes, a visit to the main branches of major banks like DBS, OCBC, or UOB is typically required. Alternatively, utilizing online platforms such as FSMOne can streamline the transaction process. It's worth noting that if your T-bills were not originally procured through, transferring them to the platform before selling may necessitate additional time, adding a layer of complexity to the transaction.

Interest Rate Risk

Firstly, there’s the interest rate risk. The interest rate offered by T-bills can fluctuate, and this is largely influenced by the overall economic environment. When interest rates rise, the value of existing T-bills usually decreases, and vice versa. This is crucial, especially if you plan to sell your T-bills before they mature.

Unpredictability of Yields at Point of Subscription

Another point to consider is the unpredictability of yields at the point of subscription. The yield – essentially the return you expect to receive – is not fixed when you buy Singapore T-bills. It’s determined by the market, meaning it can change between when you decide to buy and when your purchase is processed. This can be a bit of a wild card for those who prefer knowing exactly what return they’ll get.

Now, how can you adeptly navigate these challenges? Knowledge and timing are your best tools here. Keep an eye on market trends and economic forecasts – they can give you valuable insights into potential interest rate movements. Also, consider your financial timeline. If you don’t need to access your invested funds for a while, the interest rate risk might be less of a concern.

Remember, T-bills are generally considered a safe investment, but like all investments, they’re not without their nuances. Understanding and preparing for these risks can help ensure that your investment in T-bills aligns with your overall financial strategy and goals.

Alternatively, for investors seeking to avoid the complexities in investing in T-bills, StashAway’s Simple Guaranteed presents an appealing option. Simple Guaranteed offers a straightforward cash management solution with customizable tenor options, enabling investors to align their investment horizon with their financial goals. Besides that, while offering a competitive 3.75% rate, it does not impose any minimum or maximum deposit limits, providing unparalleled flexibility. 

T-Bill Auctions

When investing in T-bills, understanding the auction process and noting the auction dates are key. It’s like the heart of the T-bill investment journey; getting to grips with it can elevate your investment strategy. First, Let’s break down the two main types of bids in T-bill auctions: competitive and non-competitive.

In a competitive bid, you specify the yield you’re willing to accept. Think of it as haggling at a marketplace; you’re saying, “This is what I’m willing to pay.” But here’s the catch: there’s no guarantee your bid will be accepted. If your bid is too low compared to others, you might not get any T-bills. This option is often preferred by more experienced investors who have a good grasp of the market.

On the flip side, there’s the non-competitive bid. This is where you agree to accept whatever yield is determined at the auction. It’s like saying, “I’m happy with what the market decides.” The beauty of this approach is that you’re guaranteed to receive the T-bills up to a certain amount. This is a popular choice for individual investors who prefer a more straightforward approach.

In a T-bill auction, competitive bids are considered first. The highest bids (i.e., those accepting the lowest yields) are filled, and this continues until all available T-bills in the auction are allocated. If there are T-bills left over, they go to the non-competitive bidders.

Competitive bidsNon-competitive bids
DescriptionInvestors specify the yield they're willing to accept.Investors specify the amount they want to invest, not the yield.
Suitable for?Suitable for investors who will invest only if the cut-off yield is above a certain level.Ideal for investors interested in the bond regardless of the return or uncertain about what yield to bid.
Allocation ProcessHighest bids (lowest yields) are filled first.Filled after competitive bids; receives leftover T-bills.
ProsOffers the flexibility to invest elsewhere if the cut-off yield in the auction is lower than the proposed yield.Receives priority allocation, up to 40% of the total issuance amount.
ConsRisk of not being allocated if the bid yield exceeds the cut-off yield.Possibility of not receiving full allocation if total non-competitive bids exceed the allocation limit.

So, how can you craft a smart bidding strategy? Here are a couple of tips:

Stay Informed: Keep an eye on the current market yields for T-Bills. This information can guide you in deciding what yield to bid if you’re going competitive or whether to go non-competitive.

Understand Your Goals: If securing the T-Bill is more important than the yield, a non-competitive bid might be your best bet. But if you’re aiming for a specific yield target and are okay with the risk of not being allocated any T-Bills, consider a competitive bid.

Calculating T-Bill Yields

The secret to T-bill investments lies in the ability to decipher yields. Let’s start by demystifying the process, focusing on the relationship between their purchase price and the face value.

T-bills are sold at a discount from their face value. Imagine the face value as the amount you’ll get when the T-bill matures, and the purchase price as what you’re paying for it now. The difference between these two amounts is your earnings or the interest.

Here’s a simplified way to look at it:

Face Value: This is the amount you’ll receive when your T-Bill matures. It’s like the promised amount at the end of your investment journey.

Purchase Price: Think of this as the discounted price you pay when you buy the T-Bill. It’s less than the face value because that’s how you profit.

To calculate the yield, you can use this basic formula:

This formula adjusts the profit (face value minus purchase price) to an annual rate, making it easier to compare with other investment options.

Secondary Market Trading

In the secondary market, investors can buy or sell T-bills before they reach maturity. This is done through brokerage firms. Think of it as a marketplace where you can sell your T-bills if you need cash before the maturity date or buy others’ T-bills if you’re looking for a short-term investment.

However, this flexibility has a caveat – the potential for capital losses. Here’s why: if interest rates rise after you buy a T-bill, its value on the secondary market can decrease. This is because newer T-bills might be issued at higher rates, making older ones with lower rates less attractive. If you decide to sell in this scenario, you might end up getting less than what you paid, leading to a capital loss.

Using CPF for T-Bill Investment

Did you know you can use your CPF monies to invest in T-bills? Doing so allows you to enjoy the stability of CPF while reaping the potential higher yields of T-bills. While it’s no doubt an attractive investment option, it’s important to weigh this against the risk-free nature and guaranteed returns of CPF.

Now, when it comes to using CPF funds for T-bill investments, there are specific guidelines and eligibility criteria to consider. CPF Investment Scheme (CPFIS) allows you to invest your CPF savings in various investment products, including T-bills. But, there are conditions:

Eligibility: You need to meet these criteria to use your CPF savings for investment:

  1. are at least 18 years old;
  2. are not an undischarged bankrupt;
  3. have more than $20,000 in your OA; and/or
  4. have more than $40,000 in your SA; and
  5. have completed the CPFIS Self-Awareness Questionnaire (SAQ)

Investment Limits: You are only allowed to invest up to 35% and 10% of your investible savings. 

How to Buy T-Bills in Singapore

You can purchase T-bills in 3 ways: via CPF, Supplementary Retirement Scheme (SRS), or simply by cash. Here’s a quick breakdown of the application process:

CashTo invest in T-bills using cash, you need to have a brokerage account and an associated Central Depository (CDP) account. The application can typically be made online through your brokerage platform. It’s as simple as selecting the T-bill you wish to bid for and specifying the amount.  
SRSIf you’re looking to invest through SRS, the process is similar to cash. Ensure your SRS funds are linked to your brokerage account. From there, it’s a matter of placing your bid through the platform.
CPFISFor CPFIS, the process requires an extra step. First, ensure you’re eligible and have set aside the requisite minimum amount in your CPF Ordinary Account. Then, you can apply through a CPFIS-approved broker. This might involve filling out additional forms to authorize the use of CPF funds for investment.

Applications submitted through ATMs and online banking platforms typically conclude 1 to 2 business days prior to the auction date. This lead time is necessary as banks require processing time before the auction closes. It's advisable to verify the precise cut-off times for various application channels directly with your bank.

For new T-bill issuances in Singapore, the entire bid amount is debited from your account upon application submission. Therefore, ensuring adequate funds in the designated account is essential.

In the event of an unsuccessful bid, the funds will be promptly refunded to the originating account. Typically, refunds are processed within 1 to 2 business days following the auction day and will reflect in your account accordingly.

Minimum and maximum subscription

The minimum bid amount for T-bills in Singapore is S$1,000, requiring investors to determine their investment in multiples of S$1,000. While there is no specific maximum limit on T-bill ownership, allotment limits are enforced for auctions surpassing S$1 million.

Key Dates and Deadlines

T-bill auctions are held regularly, usually once every month. The exact dates can be found on the Monetary Authority of Singapore (MAS) website or through your brokerage firm.

Applications typically open a week before the auction date and close a few days before the auction. It’s crucial to monitor these deadlines to ensure your bid is submitted on time.

Fees Associated

When investing in T-Bills, there are some fees to consider. Brokerage fees are the most common, and these vary between brokers. It’s a good idea to compare fees across different platforms to find the most cost-effective option.

For CPFIS and SRS investments, additional administrative fees may apply. These fees are usually minimal but are important to factor into your overall investment cost.

Ownership and Checking Results

One of the appealing aspects of T-bills is that there’s no cap on how much you can own. Whether you’re a new investor starting small or a seasoned player looking to significantly diversify your portfolio, T-bills offer you the flexibility to invest as much as you’re comfortable with. This absence of an ownership limit allows for significant scalability in your investment strategy.

After participating in a T-bill auction, naturally, you’ll want to know whether your subscription was successful. This is how you can check:

  • For cash applications: You can check your CDP statement
  • For SRS application: You can check the statements from your SRS Operator (DBS/POSB, OCBC and UOB are SRS operators)
  • For CPFIS-OA application: You can check the CPFIS statement sent by your agent bank (DBS/POSB, OCBC and UOB are CPFIS agent banks)
  • For CPFIS-SA application: You can check your CPF statement

Kickstart Your Investment Journey

With their blend of security, liquidity and competitive yields, it’s no wonder that T-bills are one of Singapore’s most popular investment options. If you’re just starting your investment journey or are looking for another addition to diversify your portfolio, be sure to throw T-bills into the list of investment avenues to consider.

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