6 month T-Bills issued at 3.88% yield – Demand is still very strong despite interest rates going down (2 February 2023)



So the latest T-Bills auction results (2 Feb 2023) are out.

And interest rates on the 6 month T-Bills continue their downtrend to 3.88% (vs 4.00% the previous auction).


2 February 2023 T-Bills Auction Results – 3.88% cut-off yield

Cut-off yield is 3.88% – meaning that everyone will get T-Bills at 3.88% regardless of whether you applied for a competitive or non-competitive bid (as long as you are allotted).

Full allotment for non-competitive applications again.

What this means practically is that:

If you applied non-competitive, you get 100% allotment of whatever amount you applied for (at 3.88%).

If you applied competitive below 3.88%, you get 100% allotment (at 3.88% yield).

If you applied competitive at 3.88%, you get 71% allotment.

If you applied competitive above 3.88%, you get nothing.

Statistics wise – the median yield went down to 3.77% (vs 3.9% previous auction).

While average yield went up quite a bit to 3.27% (vs 2.71% previous auction).

So generally speaking it seems the bidding has become more rational (reflected in higher average yields), while also reflecting the downtrend in interest rates (median yield is down).

Application amounts for T-Bills remains very high at $12.9 billion

Interestingly though, the total amount of applications for the T-Bills remains very high at $12.9 billion.

The previous auction was $13.1 billion, so this is only a $200 million drop from the previous auction.

You can see this charted below, current levels of demand for T-Bills are still very close to all time highs.


Is all this demand coming from CPF-OA? Can apply for T-Bills online if your CPF-IA is with DBS

Just a shoutout that if you are buying T-Bills using CPF-OA, you can now do so online (if your CPF-IA account is with DBS).

Previously the main drawback to buying T-Bills with CPF-OA is having to go down to the bank and queue for an hour.

And anecdotally, it seems like a lot of the T-Bills demand is coming from CPF-OA applicants.

I mean when you’re using 2.5% CPF-OA cash to buy, even 3.88% T-Bills is a big increase in interest rates.


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For cash – there are better options out there than 3.88% T-BIlls

That being said, if you’re applying using cash though, I think there are better options out there.

RHB Fixed Deposit pays up to 4.28%.

And if you want to stick with a local bank, OCBC Fixed Deposit pays 4.08% for 8 months.

Both of which are very competitive (and arguably even better than) T-Bills at 3.88% due to the liquidity (can be broken early with a small penalty).

Did I apply for this round of T-Bills?

Personally for me I got lazy and decided to just skip this round of T-Bills.

Looking at the global interest rate trends I expected this round of T-Bills to come in quite low, and that turned out to be correct.

I’ll probably just chuck the cash in an 8 month OCBC Fixed Deposit paying 4.08% and be done with it.


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