T-Bill 14 Nov 2023 (BS23122F) Auction Result: Yield Dropped to 3.75%

MAS has announced the auction result for T-bill 14 Nov 2023 (BS23122F), and the final cut-off yield was 3.75%. It is a significant drop from the 3.95% yield in the previous auction. This is slightly disappointing for investors as we have seen a trend of climbing yields in recent auctions.

Auction Result

Let us look into the auction summary and see what we can observe.

Allotment

Yield and Price

Source: MAS

Yield Dropped to 3.75%

The cut-off yield for the T-bill 14 Nov 2023 (BS23122F) auction fell to 3.75%. This is the level we have seen most of this year. Despite a somewhat disappointing yield result, we have to be fair that the current level is still among the highest in recent years.

The historical chart above shows that yields have ranged around this level since the beginning of this year. At 3.75%, we can conservatively say the yield is pretty attractive, as it remains among the highest in recent years. For reference, the yield was still below 1% back in 2022.

Demand Spiked

One factor that could contribute to the lower yield is the jump in demand. Total applications jumped to $13.2 billion, up from $11.5 billion, almost a 15% increase. We also saw a jump in non-competitive bid amounts, indicating higher demand from retail investors. The bad news is that non-competitive bids exceeded the 40% maximum threshold, so these bidders received only 95% of their allocation.

With such high demand, we may need to continue submitting competitive bids to ensure we can receive our full allocation.

T-Bill Alternatives

Despite the drop, the current yield remains competitive with similar short-term fixed-income investments. Let’s look at some of the popular alternatives.

Fixed Deposits

Fixed deposits in Singapore have offered relatively low interest rates this year. As of this writing, the highest fixed deposit rate is only 3.6%, while most offer a low 3%. At such low rates, T-bills are more attractive than fixed deposits.

Syfe Cash+ Guaranteed

This is a unique offering from Syfe for its cash management account. Syfe recently bumped its Cash+ Guaranteed offering to a guaranteed rate of 3.8% for three months. This is now higher than the latest T-bill rate of 3.75%. The downside of Syfe Cash+ Guaranteed is that it isn’t SDIC-insured because cash management accounts are considered investment instruments. Additionally, the lock-in period is only for three months. If the interest rate declines, you may be exposed to reinvestment risk after three months.

High Yield Savings Account

High-yield savings accounts offer competitive rates if you can fulfill their requirements, such as crediting salary, spending on credit cards, buying insurance, etc. Most people can meet only a few, so the effective interest rate is much lower than advertised. Calculating how much you can realistically get from these accounts is a good start.

You also need to know these accounts offer floating interest rates, meaning they follow prevailing market rates without any lock-in period. For example, if interest rates drop significantly next month, these accounts will likely follow suit soon.

What Would We Do?

We have been using T-bills to park our short-term cash, and we believe the current 3.75% yield is still relatively attractive. Because of the high demand from non-competitive bidders in recent auctions, we have been using competitive bids when applying for T-bills. We will continue to use competitive bids to ensure we receive our full allocation.

Did you receive your allocation in the T-bill auction on 14 Nov 2023 (BS23122F)?

Would you like to apply for the next T-bill? If you intend to use CPF, you may use our CPF T-bill calculator to estimate the additional interest you may earn by investing in T-bills.

We have also written a comprehensive guide to Singapore T-bills and how to buy them.