T-Bill 17 Oct 2023 (BS23120A) Yield at 3.87%: Highest Demand

The T-Bill 17 Oct 2023 (BS23120A) auction has concluded with a cut-off yield of 3.87%. It is a significant drop from the previous auction, which yielded 4.07%. Despite the decline, the yield is still competitive compared to recent auctions. What caused this drop? Let’s see the auction summary.

Auction Result


Total Amount Allotted S$5.4 billion
Amount Allotted to Non-Competitive Applications S$2.2 billion
Total Amount Applied S$14.7 billion
% of Competitive Applications at Cut-off Allotted Approximately 68%
% of Non-Competitive Applications Allotted Approximately 79%
Bid-to-Cover Ratio 2.73

Yield and Price

Cut-off Yield 3.87% p.a.
Cut-off Price 98.07
Median Yield 3.66% p.a.
Median Price 98.175
Average Yield 3.37% p.a.
Average Price 98.32

Source: MAS


Yield Dropped

So this T-Bill 17 Oct 2023 (BS23120A) ended up with a much lower yield of 3.87%, a drop from 4.07% in the previous auction. This result may disappoint some investors seeking a yield north of 4%. But to put things into perspective, this yield is still among the highest in recent times. Here we compile the T-bill yield historical chart:

T-Bill 17 Oct 2023 (BS23120A) - T-bill historical interest rates
Source: Singapore T-bill interest rates

The historical chart above shows that the T-bill yields have been hovering around the current level since the beginning of this year. In our opinion, 3.87% is still pretty attractive. We can monitor the movement of this yield in the coming auctions to see the trend.


Highest Demand This Year

This auction comes with a small surprise: The demand skyrocketed to the highest level we have not seen for a while. The total amount applied hit $14.7 billion, wow! As a perspective, the total application amount in the previous auction was only $9.3 billion.

T-Bill 17 Oct 2023 (BS23120A) - T-Bill Demand Chart

The higher demand is not a surprise because of the high yield from the previous auction. With T-bill alternatives, such as fixed deposits, only yielding low to mid 3%, there is little incentive to park your money in fixed deposits when T-bills yield 4%. This high demand contributes to the lower cut-off yield in this T-Bill 17 Oct 2023 (BS23120A) auction.

We will monitor this demand in the coming auctions to see if it reverses again as the yield drops in this auction.


Non-Competitive Bid Allocation Cap Hit

As mentioned in our previous auction coverage, we were slightly uncomfortable with the rising non-competitive bid amount and would prefer to apply via competitive bids in this auction. Our concern became a reality, and the non-competitive bids allocation cap was hit in this auction. Only 79% of non-competitive applicants were allocated. The non-competitive bids amounted to around $2.8 billion, while the maximum allocation was only $2.2 billion.

We will likely continue placing competitive bids in the next auction to maximize allocation chance. We will monitor the situation to see if the trend reverses so we can resume using non-competitive bids.


T-Bill Alternatives

What are some T-bill alternatives we can consider?

Fixed Deposits

The most popular fixed-income investment for retail investors is fixed deposit. How do fixed deposit rates compare to T-bill interest rates? In short, fixed deposit rates are currently not competitive. Even after the recent bump, the highest rate is only 3.6%, while Singapore local banks offer even lower than 3%. For now, it seems we can skip fixed deposits and consider other alternatives.

High-Yield Savings Accounts

With high-yield savings accounts, the effective interest rate is usually much lower than advertised because most of us cannot fulfill the requirement for bonus interest rates. However, if you can meet those criteria, such as crediting salary, spending credit card, buying insurance, etc, high-yield savings accounts can offer very competitive interest rates.

However, please note that, unlike T-bills, the interest rate here is floating, meaning it will follow the prevailing market rates without any locking period. Should the market interest rates drop, the rates offered by these high-yield savings accounts will likely follow suit soon. On the other hand, you can get the benefit of liquidity because your money is not locked. Therefore, this savings account is more suitable for your emergency funds.

Cash Management Accounts

Cash management accounts have a different risk profile than T-bills because your principal is not guaranteed. Although the risk is minimal, principal loss is still possible. If you are comfortable with this slightly higher risk, cash management accounts can offer competitive interest rates above 4%. You may check the latest offering of cash management accounts to get the most competitive rates available in the market.

Unless explicitly stated, the interest rate here is also floating. Should the prevailing market interest rates reverse, these cash management account rates likely drop quickly.


What Would We Do?

We have used T-bills and high-yield savings accounts to park our short-term cash. We still think the current T-bill yield of 3.87% is pretty competitive and are still interested in utilizing T-bills, at least for now. However, with the high demand in this auction, we would likely stick with competitive bids in the upcoming auction to ensure full allocation.

Did you manage to get an allocation in this T-bill auction?

Do you want to apply for the next T-bill auction? If you plan to use CPF, you can use our CPF T-bill calculator to estimate how much more interest you can earn by investing in T-bills.

In addition, we have written a comprehensive guide about Singapore T-bills and how to buy T-bills.

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Disclaimer: The information provided here is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice or recommendation of any sort.

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