Latest Singapore T-Bills (Est. Yield 4.2% – 4.3%) available to buy until 9 November 2022

There’s been a lot of interest around Singapore T-Bills recently.

And it’s not hard to see why.

The latest T-Bills auction closed at 4.19%.

Which means you get paid 4.19% per annum, completely risk free, to lend money to the Singapore government.

Why even bother with equity risk premium in a climate like that?

It’s getting to a point where the yields on T-Bills are so much higher than CPF-OA’s 2.5% that you can run a risk-free carry trade buying T-Bills using CPF-OA funds (which I explore more in my article here).

Next Singapore 6-month T-Bills Auction on 10 November 2022 – Apply by 9 November 2022

In any case, T-Bills auctions tend to be less well known that Singapore Savings Bonds, so I wanted to do a public shoutout that the next T-Bills auction is on 10 November 2022. 

If you want to subscribe, you need to apply at least 1 business day before, so by Wednesday, 9 November 2022.

You can apply via online banking for Cash and SRS, but you need to go down to a bank (OCBC, UOB and DBS) in person for CPF.

If you miss this T-Bills auction the next one is 24 November 2022, so it’s not the end of the world (full auction schedule for 2022 here).

What is the yield on the 10 Nov T-Bills?

Now T-Bills are not like Singapore Savings Bonds where the yields are predetermined before you apply for them.

With T-Bills the yields are determined at auction, by matching supply vs demand.

Which means that you don’t actually know what are the yields on the T-Bills you are applying for, until the auction results are out.

Indicative Yields of 4.2 – 4.3% for the T-Bills?

You can get some clues from the market though.

The latest T-Bill auction on 27 October saw 4.19% yields for the 6 month T-Bills.

While the latest 12 Week MAS Bills closed at 4.4%.

So indicatively, you might be looking at 4.2% – 4.3% yields on T-Bills for the next auction.

But…this is INDICATIVE

That said I do want to stress that this is indicative yields.

Like I said, the actual yields are determined by matching supply vs demand on auction day.

Unless you know exactly how much investors are going to apply for at what prices, it is almost impossible to determine the exact yields on the T-Bills auction ahead of time.

You can get around the uncertainty by submitting a competitive bid for T-Bills

Remember with T-Bills you can submit either a:

1. Non-competitive Bid – you can issued T-Bills at whatever the cut-off yield is
2. Competitive Bid – you only get issued T-Bills if the cut-off yield is above your bid price

So if you are worried about not knowing that the yield on the T-Bills would be, one option is to submit a competitive bid.

It’s very easy to do so – on the application page via internet banking, just select “competitive bid”, and fill in the bid yield (%), and how much you want.

And you only get allocated T-Bills if the cut-off yield is above your bid yield (%).

So if your bid yield is 4.2% and the cut-off yield is 4.1%, then you wouldn’t get any T-Bills at all.

If you’re worried about not knowing what yields you’re going to get on the T-Bills, competitive bid is a good solution.

There’s no limit to the number of comeptitive bids you can make, so feel free to go crazy.

You do need the cash to back it up though, because you need to pay the application amount when you apply (just like Singapore Savings Bonds).

 

BTW – we share commentary on Singapore Investments every week, so do join our Telegram Channel (or Telegram Group), Facebook and Instagram to stay up to date!

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Will I get full allotment of Singapore T-Bills?

Okay here it gets a bit tricky.

All T-Bills auctions this year saw 100% allotment for non-competitive applications.

So each person applying non-competitive this year would have gotten the full amount they applied for (up to application limit of $1,000,000).

The complexity though, is that as the yields on the T-Bills go up, they became more and more popular.

And with T-Bills breaking past 4%, they started getting a lot of interest.

To the point where I have a nagging suspicion that this T-Bills auction might be quite popular.

Non-Competitive Bids are allocated only up to 40% of the total issuance amount

Non-competitive bids are allocated only up to 40% of the total issuance amount, after which they are allocated on a pro-rated basis.

Total issue size is $4.5 billion, so 40% of that is $1.8 billion.

That’s a big issue size, 80% higher than the latest Singapore Savings Bonds at $1 billion.

But I mean, it’s also tough to say how popular T-Bills might be, now that they’ve broken 4%.

Long story short – all T-Bills auctions this year had 100% allocation for non-competitive bids.

But if you’re really unlucky and this time round is super popular (such that non-competitive bids exceed $1.8 billion), allotment will be pro-rated. 

Be prepare to hold till maturity if you do apply for the T-Bills

That said, one notable drawback with T-Bills is the lack of liquidity.

Sure you can sell your position over the counter if you’re a high net worth individual holding a multimillion dollar position.

But for retail investors, you’re probably better off just holding the T-Bills until maturity.

Which means if you need the money before the 6 month maturity, you might be better of applying for the Singapore Savings Bonds or fixed deposits instead – both of which can be more easily unlocked before maturity.

Next T-Bills Auction on 10 November 2022 – Apply by 9 November 2022

Next T-Bills auction is on 10 November 2022 (if you miss this the next one is 24 November 2022, full schedule here).

If you want to subscribe, you need to apply at least 1 business day before, so by Wednesday, 9 November 2022.

You can apply via online banking for Cash and SRS, but you need to go down to a bank (OCBC, UOB and DBS) in person for CPF.

 

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