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New 6-Month Singapore T-Bill (est. 4.0% Yield) Available on Auction Until 24th November 2022

A Singapore Treasury Bill issue (BS22123S) will be auctioned on Thursday, 24th November 2022.

If you wish to subscribe successfully, get your order via internet banking (Cash and SRS) or in person (CPF) by 23rd November. You can also apply with your CPF-OA and CPF-SA funds, but you would have to go down to a bank (OCBC, UOB and DBS) and do it in person. You can also apply the same issue with your cash and SRS.

You can view the details at MAS here.

In the past, I have shared with you the virtues of the Singapore T-bills, their ideal uses, and how to subscribe to them here: How to Buy Singapore 6-Month Treasury Bills (T-Bills) or 1-Year SGS Bonds.

In the last issue announced two weeks ago and recently concluded, the current t-bills traded at a yield of 3.95%. In the end, the cut-off yield for the t-bill ended at 4.00%.

If you placed a non-competitive bid, which most of us do, you would have gotten an attractive annualized yield of 4.00%.

Gaining Insights About the Upcoming Singapore T-bill Yield from the Daily Closing Yield of Existing Singapore T-bills.

The table below shows the current interest yield the six-month Singapore T-bills is trading at:

The daily yield at closing gives us a rough indication of how much the 6-month Singapore T-bill will trade at the end of the month. From the daily yield at closing, we should expect the upcoming T-bill yield to trade close to the yield of the last issue.

Currently, the 6-month Singapore T-bills are trading close to a yield of 4.0% to 4.03% in the last few days, which is close to the yield of the T-bills 2 weeks ago.

Gaining Insights About the Upcoming Singapore T-bill Yield from the Daily Closing Yield of Existing MAS Bills.

Typically, the Monetary Authority of Singapore (MAS) will issue a 4-week and a 12-week MAS Bill to institutional investors.

The credit quality or the credit risk of the MAS Bill should be very similar to the Singapore T-bills since the Singapore government issues both. The 12-week MAS Bill (3 months) should be the closest term to the six-month Singapore T-bills.

Thus, we can gain insights into the yield of the upcoming T-bill from the daily closing yield of the 12-week MAS Bill.

The cut-off yield for the latest MAS bill auctioned on 15 Nov (a couple of days ago) is 4.42%.

Currently, the MAS Bill trades close to 4.18%.

Given that the MAS 12-week yield is at 4.18% and the last traded 6-month T-bill yield is at 4%, what is likely to be the T-bill yield this time round?

In the last auction, we observed that enough people did competitive bidding at lower than cut-off yield versus those that did non-competitive bidding. The lower bids eventually bring down the eventual cut-off yield to 4%.

Much of the final cut-off yield will depend on the number of people making competitive and non-competitive bids.

My sensing is that we should see the yield to be around 4% still.

Here are your other Higher Return, Safe and Short-Term Savings & Investment Options for Singaporeans in 2022

You may be wondering whether other savings & investment options give you higher returns but are still relatively safe and liquid enough.

Here are different other categories of securities to consider:

Security Type Range of Returns Lock-in Minimum Remarks
Fixed & Time Deposits on Promotional Rates 4% 12M -24M > $20,000
Singapore Savings Bonds (SSB) 2.9% - 3.4% 1M > $1,000 Max $200k per person. When in demand, it can be challenging to get an allocation. A good SSB Example.
SGS 6-month Treasury Bills 2.5% - 4.19% 6M > $1,000 Suitable if you have a lot of money to deploy. How to buy T-bills guide.
SGS 1-Year Bond 3.72% 12M > $1,000 Suitable if you have a lot of money to deploy. How to buy T-bills guide.
Short-term Insurance Endowment 1.8-4.3% 2Y - 3Y > $10,000 Make sure they are capital guaranteed. Usually, there is a maximum amount you can buy. A good example Gro Capital Ease
Money-Market Funds 3.6% 1W > $100 Suitable if you have a lot of money to deploy. A fund that invests in fixed deposits will actively help you capture the highest prevailing interest rates. Do read up the factsheet or prospectus to ensure the fund only invests in fixed deposits & equivalents. MoneyOwl’s WiseSaver – Fullerton Cash Fund example.

This table is updated as of 17th November 2022.

There are other securities or products that may fail to meet the criteria to give back your principal, high liquidity and good returns. Structured deposits contain derivatives that increase the degree of risk. Many cash management portfolios of Robo-advisers and banks contain short-duration bond funds. Their values may fluctuate in the short term and may not be ideal if you require a 100% return of your principal amount.

The returns provided are not cast in stone and will fluctuate based on the current short-term interest rates. You should adopt more goal-based planning and use the most suitable instruments/securities to help you accumulate or spend down your wealth instead of having all your money in short-term savings & investment options.

If you want to trade these stocks I mentioned, you can open an account with Interactive Brokers. Interactive Brokers is the leading low-cost and efficient broker I use and trust to invest & trade my holdings in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. They allow you to trade stocks, ETFs, options, futures, forex, bonds and funds worldwide from a single integrated account.

You can read more about my thoughts about Interactive Brokers in this Interactive Brokers Deep Dive Series, starting with how to create & fund your Interactive Brokers account easily.

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Pete

Friday 18th of November 2022

In hope of getting 100% allocation, I read that more people are using their CPF OA to bid at rate of 3% to 3.5%. It is not hard to figure out anything above 3.5% is already making the move from OA to T-bill worth it.

I am wondering if there are published data for competitive individual vs institution bids? I am just wondering how individual (kiasu) competitive bids will offer the cut-off yield moving forward.

Kyith

Saturday 19th of November 2022

Hi Pete, interesting thoughts. I thought a lot of people bidded low since they will get a cut off yield. but i guess people want to make sure that they earn close to a hurdle CPF rate that compensate them for the additional effort of going down to the bank branches to do it.

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