T-bills in Singapore: What it is, how to buy and the latest cut-off yield (28 November 2023)

SINGAPORE — The latest six-month Treasury Bills (T-bills) issued on 28 November 2023 had a cut-off yield of 3.8 per cent per annum, and the cut-off price was 98.105.

With a S$13 billion applied amount, the total S$6 billion offered was allotted, with S$2.2 billion allotted to non-competitive applications (100 per cent of these applications).

According to the Monetary Authority of Singapore (MAS) announcement, the latest T-bills will have a maturity date of 28 May 2024.

Previous six-month T-bills, in an auction on 8 November, offered a cut-off yield of 3.75 per cent per annum. Approximately 95 per cent of the non-competitive bid were allotted.

What are T-bills and how do they work?

T-bills are short-term Singapore Government Securities (SGS) issued at a discount to their face value with a fixed interest rate. The Singapore government issues six-month and one-year T-bills with a minimum bid amount of S$1,000 – bids will be in multiples of S$1,000.

Investors will receive the full face value at maturity. So, for instance, if an investor buys a six-month T-bill worth S$10,000 with a yield of three per cent per annum, he needs to pay only S$9,850 upfront. At the end of the tenor, he will receive the full S$10,000 and therefore earn S$150.

T-bills are fully backed by the government and have an AAA credit rating. As such, T-bills are considered as a very low risk short-term investment option that you can use to diversify your portfolio.

You can invest with cash, Central Provident Fund (CPF) funds or Supplementary Retirement Scheme (SRS) funds without an overall limit.

How do I buy T-bills in Singapore?

You may bid for T-bills at primary auctions that typically take place three business days before issuance and are announced on the SGS website five business days before the auction. Check the issuance calendar for scheduled auctions, announcements and results.

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The first thing you must do is to ensure that you have sufficient funds in your account. For applications for new issues funded using cash, the full bid amount will be debited from your account at the point of application. You’ll also need to have an account with one of three local banks: DBS/POSB, OCBC, or UOB.

Applications through ATMs, Internet banking and mobile banking apps may close one to two business days before the auction. So, you should check with your bank for the exact cut-off time for the different application channels.

If you buy them using SRS funds, you will need an SRS account with any one of the three SRS operators (DBS/POSB, UOB, and OCBC). You can apply for T-bills through your SRS operator’s Internet banking portal.

You will see the transaction reflected in the statement issued by your SRS operator if it went through successfully.

When using CPF Investment Scheme (CPFIS) funds, you will need a CPF Investment Account with any one of the three CPIF agent banks (DBS/PSOB, UOB, or OCBC).

However, unlike the two options above, you will need to submit an application in person at any of the CPFIS bond dealers’ branches. If it went through successfully, you’ll see the transaction reflected in your CPFIS statement issued by your agent bank.

If your bid is unsuccessful or invalid, the money will be refunded into the account used to make the application. The refund will be reflected in your account one to two business days after the auction.

What is competitive and non-competitive bidding?

There are two bidding options available when you apply for T-bills: competitive bid and non-competitive bid.

A competitive bid is submitted if you wish to invest in the T-bills only if they yield above a certain level. You can specify the yield you are willing to accept in percentage terms, up to two decimal places. A lower yield means a more competitive bid. This type of bid is typically for institutional or savvier investors.

If you only specify the amount you want to invest, not the yield, then submit a non-competitive bid. Choose this if you wish to invest in the T-bill regardless of the return or are unsure of what yield to bid.

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

What’s the difference between T-bills and SSB?

Are T-bills taxable in Singapore?

There is no capital gain tax in Singapore. For individuals, interest income earned on T-bills is tax exempt.

Non-residents without a permanent establishment in Singapore do not have to pay taxes on interest income.

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