Treasury Bills (T-Bills) Singapore: The Comprehensive Guide

Treasury bills (T-bills) in Singapore are short-term government bonds offered and fully backed by the Singapore government. Singapore T-bill has a maturity of either six months or twelve months.

Singapore T-bills are backed by the Singapore government, which has the highest credit rating assigned by major rating agencies.

By investing in T-bills, your initial principal and interest are guaranteed.

T-bills Singapore Interest Rate / Yield

You may refer to our historical Singapore T-bill interest rate coverage to see how the current T-bill yield compares to previous issuances.

In a typical economic environment, the shorter-term bond yield is lower than the longer-term bond yield. However, as of this writing, the current bond yield is inverted, meaning the shorter bond yield is higher than the longer-term bond yield.

This implies T-bill Singapore, a short-term bond, generates one of the highest yields among all maturities. Singapore T-bills yield has been rising recently, and this is excellent news for investors looking to park their cash in the short term.

Singapore T-bills vs. SGS Bonds vs. SSB vs. Fixed Deposits

The alternatives to T-bills are SGS Bonds, Singapore Savings Bonds, and Fixed Deposits. They are all fixed-income instruments that guarantee investors’ principal and interest. But how do they compare to T-bill Singapore?

T-bills vs. SGS Bonds

T-bills are short-term bonds with six or twelve months of maturity, while SGS bonds are long-term bonds with a maturity longer than two years. While SGS bonds pay coupons every six months, T-bills pay investors by giving a discount on the face value of the bills when buying.

T-bills vs. SSB

Singapore Savings Bonds (SSB) are long-term ten-year Singapore government bonds, while T-bills are short-term. SSB allows withdrawal (partial or full) at any month before maturity while still earning the accrued interest. T-bills do not allow early redemption. Your principal will be paid back at maturity. Instead, you can trade T-bills at the secondary market, but you may incur losses on your initial principal depending on prevailing market rates.

T-bills vs. Fixed Deposits

T-bills and fixed deposits are very similar due to their short-term maturity. The main difference is that T-bills pay investors upfront, while fixed deposits pay at maturity. The Singapore government backs T-bills, while the issuing bank backs fixed deposits. There is additional insurance of up to $75,000 from SDIC if the bank fails to pay your fixed deposits.

Comparison summary

Here is the summary of these fixed-income instruments

	T-bill	SGS Bond	SSB	Fixed Deposit
Tenor	6 months, or 1 year	2, 5, 10, 15, 20, 30, or 50 years	10 years	1 month to 24 months
Minimum investment	$1,000	$1,000	$500	$500 to $30,000 (vary by banks)
Maximum investment	No	No	$200,000 (maximum total holding)	No
Interest payout	Upfront	Coupon every 6 months	Coupon every 6 months	At maturity
Redemption	At maturity	At maturity	Every month	At maturity
Secondary market trading	Yes	Yes	No	No

Pros and Cons of T-bills Singapore

Pros #1: Guaranteed principal and interest

With T-bills, your principal and interest are guaranteed. This suits investors with lower-risk profiles who seek capital preservation as their investing objective. T-bills are guaranteed by the Singapore government, which holds the highest credit rating assigned by all major credit rating agencies.

Pros #2: Short-term

T-bills are short-term bonds. It has a maturity of either six months or one year. T-bills will be one of the better places for investors looking to park their cash in the short term due to the relatively higher interest rates.

Pros #3: Interest paid upfront

Yes, Singapore T-bills pay the interest upfront as a discount to the face value. Let’s say you buy $1,000 worth of a 6-month Singapore T-bill. If the T-bill yields 4%, you only need to pay $980. In other words, you get $20 paid upfront upon successful application. You can reinvest this money immediately elsewhere as you please. You will get your $1,000 back at maturity in six months.

Cons #1: We don’t know the interest rate yet upon application

This is one quirk of how T-bills Singapore works. The yield is determined through an auction; therefore, investors will not know the yield until after the auction. Don’t worry, though, because placing a competitive bid can ensure you get at least a specific yield. We cover this in more depth in our step-by-step guide on how to buy T-bills.

Cons #2: Less flexible

Just like regular bonds, T-bills do not allow early redemption. You can only get your principal at maturity. But no worries, the good news is that you can sell your T-bills early in the secondary market. However, please note that selling your T-bills in the secondary market won’t guarantee your initial principal anymore. It will depend on the prevailing market rates.

How to Apply for T-bills Singapore?

You can easily apply online through local Singapore banks: DBS, OCBC, or UOB. We have written a step-by-step guide on how to buy T-bills. You can check the latest issuance schedule directly from the MAS website.

Non-competitive vs. competitive bids

Because the interest rate is unknown at the time of application, these bid types will help investors ensure they are allocated only for what they want.

In non-competitive bids, you only need to specify the amount you want to invest. After the auction, you will be assigned whatever the resulting interest rate/yield. You can use this option if you’re going to invest regardless of the resulting interest rate or yield.

In competitive bids, you must specify the minimum yield you want to accept.

If your bid is below the resulting cut-off yield, you will get the full allocation.
If your bid is the same as the cut-off yield, you may get a partial allocation.
If your bid is higher than the cut-off yield, you won’t get any allocation.

Use competitive bids to ensure that you earn at least a specific yield. This is very helpful for investors applying with CPF because CPF already provides interest rates by default.

How to get the interest payout?

T-bill interest payout is paid upfront in the form of a discount to the face value of the bond. The difference between the face value and the price you pay is your profit.

For example, a 6-month T-bill auction yielded a 4% cut-off yield. Investors who applied for $1,000 will only need to pay $980. The difference of $1,000 – $980 = $20 is the interest payout. After six months, investors will receive $1,000.

Should I buy Singapore T-bill with CPF?

The money in your CPF account already earns interest income. To earn more in T-bill, you must ensure the T-bill yield is much higher than the prevailing CPF interest rate.

Please note that you will lose at least one month of CPF interest rate when you use your CPF to buy T-bills. The CPF interest payment is computed using the lowest balance of the month.

For example, you buy a 6-month T-bill with an issue date in January. This T-bill will mature in July. In this case, you will lose the CPF interest rates for January until July, a total of 7 months.

In some instances, you may even lose two months of CPF interest payment if the T-bill issue date and maturity date are unfavorable. For example, a 6-month T-bill issue date of 29 November and a maturity date of 30 May may cause you to lose two months of CPF interest payments. You may not have time to get your money back to your CPF account before June, causing you to miss the June CPF interest payment.

Please consider this CPF interest rate quirk when investing your CPF into T-bills. Generally, applying for longer-term T-bills when using your CPF is better.

Here is the summary of the breakeven T-bill yield when applying using CPF:

	1 month CPF interest payment loss	2 months CPF interest payments loss
6-month T-bill	2.92%	3.33%
1-year T-bill	2.71%	2.92%

You can use our CPF T-bill calculator to estimate how much more interest you can earn by investing your CPF into T-bills.