The auction for T-bill 5 Sep 2023 (BS23117Z) has concluded, and the cut-off yield was 3.70%. This is yet another continuation of the declining yield we have seen in the recent auctions. The auction result may disappoint some investors because we still saw a 3.99% yield back in July 2023. Here is the auction result summary:
Yield Dropped Further
We have seen the overall trend of T-bill yield declining this year. From its peak of 4.4% seen late last year, the yield has declined, reaching 3.70% in this auction. Despite the drop to 3.70%, the current yield is still one of the highest in recent times. It is still much higher than the yield from just one year ago.

This declining yield is in contrast to the US T-bill yield, which continues to march higher as the Fed continues its rate hike. What could cause this decline in Singapore’s T-bill yield?
Demand Dropped
This T-bill 5 Sep 2023 (BS23117Z) auction saw a low demand of $11.2 billion. This is a significant drop from the previous auction of $11.8 billion. However, the number of non-competitive bids remained stable at $1.6 billion.
The total offering for this auction was slightly lower at $5.5 billion. Though likely not significant, this lower offering amount may contribute to the lower cut-off yield in this auction. Regardless, we still think other factors are at play here because the global interest rates continue to rise, especially in the US, while Singapore’s yield goes in the reverse direction. The regional risk in China may affect this auction because Singapore government bonds are usually perceived as one of the safest instruments in the market. However, with such a low demand, we don’t think this significantly contributes to the auction result.
Maybe most investors just want to get their allocation and do not mind bidding lower to ensure full allocation. Considering there are not many alternatives yielding as high as T-bills, this could be one reason for the lower auction result.
Non-Competitive Bids Stayed Low
There is good news for this auction: the non-competitive bids stayed low at $1.6 billion, way below the 40% allocation of $2.2 billion. This means all non-competitive bidders got the full allocation they applied for.
Since mid-year 2023, we have seen a relatively high non-competitive bid amount, with some auctions reaching the maximum allocation. This continuation of lower non-competitive bids in this auction is a welcome development for many retail investors who prefer to submit non-competitive bids.
We will continue to monitor the competitive vs. non-competitive bid amount in the coming auctions to see if the trend persists. If we continue to see these lower non-competitive bids going forward, we can safely switch to non-competitive bids while ensuring we get the full desired allocation. As for the next auction, we will still submit competitive bids.
T-Bill Alternatives
Fixed Deposits
For investors who are not satisfied with the current yield of 3.70%, where should they look for alternatives? The most obvious one is fixed deposits. Unfortunately, fixed deposits in Singapore have also seen their rates decline this year. For example, OCBC and UOB only offer 2.70%, while the highest offer from CIMB is only 3.55%. Currently, T-bill is still a more attractive option than fixed deposits.
High-Yield Savings Accounts
How about high-yield savings accounts? They are a good option for some of us who can fulfill their requirements. To earn a higher interest rate, you must usually meet specific criteria, such as crediting salary, spending credit card, buying insurance, etc. These savings accounts may not be for you if you cannot meet those criteria. Additionally, the savings accounts only offer a floating rate, which means the interest rate may be slashed at any time. We recently saw this with GXS Bank, which cut their rate from 3.48% to 2.68%.
Cash Management Accounts
Cash management accounts still offer decent rates. You can still get higher rates above the current T-bill yield of 3.70%. However, please note that your initial principal is not guaranteed with these cash management accounts. You can choose the level of risk you are comfortable with with your account, and the higher the risk, the higher the potential return, as well as the volatility on your principal. Please ensure you understand where your money goes by researching the underlying instruments the cash management accounts invest in. Also, the interest rate is floating, which means it may drop as soon as the interest rate starts to reverse down.
What do you think? It seems T-bills are still one of the more attractive options for fixed-income investors in Singapore.
Are you interested in applying for the next T-bill? To get started, read our coverage on T-bills Singapore and how to buy T-bills.