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Treasury Bills (T-Bills) Singapore Sep 2022 Guide_ Latest T-Bills Interest Rate & How To Buy T-Bills in Singapore

Treasury Bills (T-Bills) Singapore Sep 2022 Guide: Latest T-Bills Interest Rate & How To Buy T-Bills in Singapore

profileJustin Oh

Not so keen on parking your cash for 10 years in the Singapore Savings Bond (SSB) or Singapore Government Securities (SGS) bonds for the full tenor?

Or are you looking for an alternative to fixed deposits?

Enter T-bills (Treasury bills) with short maturities of only 6 months or one year, and the same backing of the Singapore Government with an “AAA” credit rating!

You’ll also receive a fixed interest payment at maturity and you can invest with cash, SRS or CPF funds with no overall limit.

Curious to find out more? Click to jump to the relevant sections:


TL;DR: Treasury Bills (T-bills) Singapore — T-bills Interest and More

The interest rate for T-bills changes every month and is only determined at the auction. So here’s a look at the past interest rates:

Details Of The Latest T-bill
Issue CodeBS22119T
ISIN CodeSGXZ40547002
Tenor6 months
Amount OfferedS$4.0 billion
Issue Date04 Oct 2022
Maturity Date04 Apr 2023
Application PeriodOpens: 22 Sep 2022

Closing date: Typically 1 - 2 business days before auction date (Check with your bank for the exact closing date)

Auction Date: 29 Sep 2022
Investment AmountsMinimum of $1,000 (in multiples of $1,000)

Individual investors can submit bids for SGS through selected banks’ ATMs and internet banking portals. Applications through these channels may close 1 to 2 business days before the auction. Individual investors should check with their banks on the exact cut-off time.

Dates: Where the issue/settlement date, coupon payment or redemption date or closing date of application specified above falls on a day that the electronic payment system, established by the Monetary Authority of Singapore, is not in operation, issuance/settlement, coupon payment, redemption, or the close of application, as the case may be, will be effected on the next business day when the electronic payment system is in operation.

How Do T-bills Work?

Treasury bills (T-bills) pay a fixed rate of interest and have maturities of either 6 months or one year, with the 6-month T-bill being the most common.

Unlike SGS bonds, however, you are not paid with coupons. Instead, you buy T-bills at a discount to the face (par) value and are given the full value at maturity.

In other words, if I were to buy a 6-months T-bill worth $10,000 with a yield of 3 per cent p.a., I would only need to pay $9,850 upfront.

At the end of the tenor, I will receive the full $10,000 worth and would have earned $150.

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Are T-bills a Good Investment?

Before we dive into how to buy T-bills, let’s take a closer look at what investing in them means for us and how it differs from SSBs and SGS bonds.

How Do I Withdraw Money From T-bills?

Investors are not able to redeem T-bills early. However, you may choose to sell your T-bill on the secondary market at DBS, OCBC, or UOB main branches.

That said, the price of the T-bill may rise or fall before maturity and the trading volume for T-bills is low, making them rather illiquid. So be sure that you are okay with locking up your money for the duration of the tenor!

Are T-bills Risk-Free?

T-bills are completely backed by the Singapore Government, which has a “AAA” credit rating.

This reduces the risks of investing in T-bills to the bare minimum (read: there’re still risks tho).

Singapore is one of only 11 countries in the world that enjoy the “AAA” credit rating! Some other countries include Switzerland, Australia, and Finland.

Having such a strong rating arguably makes the T-bills one of the safest products in the market.

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T-bills vs SGS Bonds vs SSB – What Are The Differences?

 Singapore Savings Bonds
(SSB)
Singapore Government Securities (SGS) BondsTreasury Bills (T-Bills)
What is it?Safe and flexible bond option for investorsTradable government debt securitiesShort-term tradable government debt securities.
How does it work?Pays interest every 6 months.Pays a fixed couple every 6 months.Investors buy it at a discount. Upon maturity, investors will then receive the full face value of the bill.
Investment duration10 years2, 5, 10, 15, 20, 30, 50 years6 months or 1 year
Minimum investmentS$500, and in multiples of S$500S$1,000, and in multiples of S$1,000S$1,000, and in multiples of S$1,000
Maximum limit per investorS$200,000Auction: up to allotment limit for auctions

Syndication: None
No Limit; up to the allotment limit for auctions
FeesS$2S$2

(Waived if you apply through DBS internet banking)
S$2

(Waived if you apply through DBS internet banking)
Type of Interest PaymentFixed coupon, steps up each yearFixed couponNo coupon; issued and traded at a discount to the face (par) value
Payment of interestEvery 6 months, starting from the month of issueEvery 6 months, starting from the month of issueAt maturity
How is the price and rate determined?The interest rate is fixed and published by Monetary Authority of Singapore (MAS) every month.

The interest rate is announced before the application.
Determined by auctionDetermined by auction
How to apply?Apply through DBS/POSB, OCBC and UOB ATMs or internet bankingApply through DBS/POSB, OCBC and UOB ATMs or internet bankingApply through DBS/POSB, OCBC and UOB ATMs or internet banking
How to redeem?Redeem the full principal with accrued interest through Online Bank or ATM.

There will be no penalty for early withdrawal.
No early redemption.No early redemption
Can we buy/sell on secondary markets?NoAt DBS, OCBC or UOB main branches; on SGX through brokersAt DBS, OCBC or UOB main branches
Transferable?NoYesYes
Can we invest using our SRS account?Investors can invest through their respective SRS Operator's internet banking portal.Investors can invest through their respective SRS Operator's internet banking portal.Investors can invest through their respective SRS Operator's internet banking portal.
Can we invest using our CPF/SRS?CPF: No
SRS: Yes
Auction: Yes
Syndication: No
Yes
TaxThere is no capital gains tax in Singapore

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How to Buy Singapore Government Securities T-bills?

Here’s how you go about applying for T-bills in Singapore.

What Do You Need?

Before applying, make sure you have the following:

  • A bank account with any local banks in Singapore (DBS/POSB, OCBC or UOB)
  • Central Depository (CDP) account that is linked to the bank account you intend to invest with
  • A CPF Investment Account with one of the three CPFIS agent banks (DBS/POSB, OCBC, and UOB) for CPFIS-OA investments (no account needed for CPFIS-SA investments).
  • An SRS account if you are using funds from your SRS

How to Buy (New) T-bills at Auction?

Cash

You can apply for a T-bill through two methods:

  1. Apply at an ATM (only DBS/POSB, OCBC, or UOB) near you, OR
  2. Apply through Internet Banking under Singapore Government Securities

SRS

Apply through the internet banking portal of your SRS Operator (DBS/POSB, OCBC, or UOB)

CPFIS

Submit an application in person at the main branch of your respective CPF Investment Scheme (CPFIS) agent bank (DBS/POSB, OCBC, or UOB).

What is “Competitive” and “Non-competitive” bidding?

As you apply for new T-bills, you will come across the option of a “competitive” and “non-competitive” bid.

non-competitive bid does not specify the yield. Instead, you only specify the amount you want to invest and those funds will be invested regardless of the yield. This is the option that the average Singaporean should go for.

On the other hand, a competitive bid is usually for institutional investors or the more investment-savvy. Opting for a competitive bid means that your funds will only be invested should the cut-off yield go above your specified yield.

Do note that you may not get the full amount that you applied for, depending on how your bid compares to the cut-off yield (i.e. If your bid is lower than the cut-off yield, you will get the full amount. If your bid is equal to the cut-off yield, your return amount might be lower as the allocation is pro-rata.)

Non-competitive bids will be allotted first, up to 40% of the total issuance amount. If the amount of non-competitive bids exceeds 40%, the bond will be allocated to you on a pro-rated basis. The balance of the issue amount will then be awarded to competitive bids from the lowest to highest yields.

How to Buy (Old) T-bills

Dealer Banks (Secondary Market)

Aside from bidding at a T-bill auction, you can also buy T-bills with primary dealer banks (DBS/POSB, OCBC, or UOB). This gives you an opportunity to buy older T-bills for an even higher return!

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How to Sell T-bills

Since you cannot redeem T-bills early, you may consider selling your T-bills through dealer banks (DBS/POSB, OCBC, or UOB).

But remember, the price of the bond may rise or fall before maturity, so you could lose some capital if you were to sell at a value below par value.

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How Do I Check My T-bills?

Once you’ve successfully applied for T-bills, you can view your purchases or sales of T-bills here:

  • Cash applications: CDP statement.
  • SRS application: Statements from your SRS Operator (DBS/POSB, OCBC and UOB are SRS operators).
  • CPF-OA application: CPFIS statement sent by your agent bank (DBS/POSB, OCBC and UOB are CPFIS agent banks).
  • CPF-SA application: CPF statement.

Are T-bills Right For Me?

If you are an investor who wants to invest for a short period of time (ie. 6 months or one year), T-bills are a great and safe way to park your spare cash. With interest rates going up, and previous rates (cut-off yield of 3.32% for T-bills issued on 20 September) even beating that of fixed deposits offered by banks, it’s a great way to grow your money in the short term.

That said, the interest rates are only determined at the auction, although you can get a rough idea of future interest rates with market data from the MAS website.

For those of us who want to invest for the long term (ie. 5 to 10 years), consider investing in SSBs or SGS bonds instead!

Do note that with the inflation rate at 7% in July 2022 year on year, you’re still facing a tough battle.

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About Justin Oh
Your average Zillennial who is obsessed with anime, games, movies and of course, personal finance. Join me as I break down personal finance into easily digestible and fun bits!
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