Guide to Treasury Bills (T-Bills) in Singapore

Treasury Bills, commonly known as T-Bills, are a cornerstone of investing in Singapore. They offer a blend of security and simplicity that is particularly attractive to those who are just beginning their investment journey. In the following sections, we will explore what T-Bills are, how they function, and why they might be a suitable investment option for you. Tailored specifically for novice investors, this guide aims to clarify the complexities surrounding T-Bills, highlighting their unique features and benefits within the context of Singapore's financial market.

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What is Singapore T-Bill?

A Singapore T-Bill is a short-term debt instrument issued by the Singapore government through the Monetary Authority of Singapore (MAS). When you purchase a T-Bill, you are essentially lending money to the Singapore government. These bills have a fixed short-term maturity, typically ranging from a few months to a year. 

They are considered one of the safest investment options available, as they are backed by the Singapore government, which holds an excellent credit rating. T-Bills are issued via regular auctions and are accessible to both individual and institutional investors.

How Do T-Bills Work?

Treasury Bills, or T-Bills, are like short-term IOUs from the government. Imagine you lend money to the government, and in return, they promise to pay you back a slightly higher amount after a short period, like a few months or a year. You buy these T-Bills for less than what they're worth at the end (their face value), and when they mature, the government pays you their full value. The difference between what you paid and what you get back is your profit.

Here's how they work in a more straightforward manner:

• Issued at a Discount:

T-Bills are sold for less than their face value (the amount they will be worth at maturity). For instance, you might buy a T-Bill valued at SGD 10,000 for SGD 9,800.

• Profit at Maturity: 

The profit for the investor comes at the maturity of the T-Bill. When it matures, the government pays the full face value. In the example, you would receive SGD 10,000 at the end of the term, making a profit of SGD 200.

• No Periodic Interest Payments:

Unlike traditional bonds, T-Bills do not pay periodic interest or coupon payments. The return is realized entirely at the end of the T-Bill's term.

• Yield Calculation: 

The yield, or return, of a T-Bill is calculated based on the discount and the term length. A greater discount and a shorter term generally mean a higher yield. This calculation helps investors compare the potential returns of different T-Bills.

• Suitable for Short-Term Investment: 

T-Bills are ideal for short-term investments, often used by those looking to park surplus funds with a known return at the end.

• Market Factors Influence Price:

The discount at which T-Bills are issued can vary based on market conditions, such as demand for T-Bills and prevailing interest rates. In scenarios where interest rates are rising, T-Bills might be issued at a larger discount, offering a higher yield.

• Safe Investment Option:

T-Bills are considered very safe investments as they are backed by the government. This makes them an attractive option for conservative investors or those seeking to diversify their portfolios with a low-risk asset.

In summary, T-Bills are a low-risk investment where you buy them at a lower price and get paid more when they mature, with the government guaranteeing your payment.

T-Bills remain a safe option for conservative investors, but as of 2025, some fixed deposits offer rates close to or exceeding T-Bill yields (e.g., 2.40% - 2.75%), making it essential for investors to compare both options. The backing of the Singapore government offers a strong assurance of safety, making T-Bills a staple in the investment portfolios of risk-averse individuals and institutions.

Singapore Treasury Bills Interest Rate [March 2025]

For an average investor looking to understand the current interest rates for Singapore Treasury Bills as of March 2025, the following table provides a clear overview. As seen below, here are the latest issuances in the months of January and February in 2025.

^{Source: www.mas.gov.sg}

Yield at Issue (%): This figure represents the annualized return that investors can expect from the T-Bill if held to maturity, based on the issue price. The latest 6-month T-Bill auction in March 2025 yielded a cut-off rate of 2.95%, showing a slight decline from 3.74% in early 2024.

These figures are essential for investors as they provide a clear picture of the potential returns from investing in T-Bills. The relatively low discount rate coupled with a declining yield (from 3.7% in early 2024 to 2.75% - 2.95% in 2025) indicates a more moderate return for T-Bills, though they remain attractive for risk-averse investors.

Historical Rates

Here is a comprehensive table detailing the historical rates for Singapore Treasury Bills throughout 2024.

^{Source: www.mas.gov.sg}

SSB vs SGS bonds vs T-bills

In Singapore's investment landscape, two prominent low-risk options are Singapore Savings Bonds (SSBs) and Singapore Government Securities (SGS) Bonds, alongside T-Bills.

SSBs, tailored for individual investors, offer a unique blend of flexibility and safety, with the added benefit of easy liquidity and stepped-up interest rates over time.

SGS Bonds, in contrast, are traditional government bonds, offering fixed interest over longer maturity periods, typically ranging from 2 to 30 years.

These bonds are a go-to for those seeking stable, long-term returns. Both SSBs and SGS Bonds, along with T-Bills, form a trio of secure investment choices, each catering to different financial needs and time horizons. Here are the differences between each of them at a glance:

^{Source: www.mas.gov.sg}

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^‍How to Buy T-Bills in Singapore?

Here are the steps and methods involved in buying T-Bills:

1. Open a Central Depository (CDP) Account

If you do not already have one, you will need to open a CDP account. This account is where your T-Bills will be deposited after you buy them. It is also used for other securities like stocks and bonds in Singapore.

2. Link a Bank Account

Most banks still require linking a bank account to your CDP account, but some now allow direct purchases via digital investment platforms without CDP linkage. This linked account is used for payment and receiving funds upon T-Bill maturity.

3. Participate in T-Bill Auctions

T-Bills are sold through MAS auctions, and you can now participate through multiple methods, including:

• Mobile Banking Apps & Internet Banking: Most banks (e.g., DBS, OCBC, UOB) allow bidding via online platforms and mobile banking apps.
• ATMs: Some banks still offer T-Bill bidding via ATMs, but this option is becoming less common.
• Digital Investment Platforms: Certain banks now integrate T-Bill purchases directly into their investment sections, allowing automated or recurring bids.

4. Decide on Your Bid Type

There are two types of bids you can make:

• Competitive Bid:

Specify the yield you want, but there is no guarantee of allocation if your bid is too high. Investors can now refer to past auction results on the MAS website to estimate a competitive bid.

• Non-competitive Bid:

Accept the average yield determined at auction. Most banks now offer this as the default option for retail investors, making it easier for first-time buyers to secure allocation. 

5. Submit Your Bid

Decide on the amount you want to invest (in multiples of SGD 1,000) and submit your bid before the auction deadline.

6. Await Allocation

After the auction, you will be notified of the allocation based on the bids received. If successful, the T-Bills will be credited to your CDP account.

7. Payment and Settlement

Banks now hold the bid amount temporarily during the auction period to ensure funds are available. If your bid is unsuccessful, the funds are automatically released within 1-2 business days.

8. Hold or Sell

Once you own the T-Bills, you can hold them until maturity or attempt to sell them in the secondary market. However, secondary market liquidity is limited, and banks now provide guidance on whether it is better to sell at a discount or hold to maturity.

What Is a Competitive Bid and a Non-competitive Bid?

Understanding the difference between these competitive and non-competitive bids is crucial for making informed investment decisions. Let’s take a look at them in greater detail.

Competitive Bid

In a competitive bid, the investor specifies the yield (interest rate) they are willing to accept for the T-Bills. Consider the following factors before participating in a competitive bid:

• Allocation:

There is no guarantee that a competitive bid will be successful. If the specified yield is too high compared to the prevailing market rates, the bid might not be accepted.

• Suitability:

This type of bid is more common among experienced investors who have a good understanding of the market and can accurately estimate a yield that is competitive yet likely to be accepted.

• Risk:

The risk with competitive bidding is that if your bid is not in line with market expectations, you might not receive any allocation of T-Bills.

Non-competitive Bid

In a non-competitive bid, the investor agrees to accept the average yield determined at the auction. Here are the differences of non-competitive bids:

• Allocation:

Non-competitive bids have a higher likelihood of being accepted and allocated, making them a safer option for most individual investors.

• Suitability:

This option is ideal for less experienced investors or those who prefer a simpler, more straightforward investment process.

• Yield:

The yield received will be the average of all accepted competitive bids, ensuring that the investor receives a market-based return.

How To Check T-Bills

Here are three ways for you to monitor your T-Bills:

1. CPFIS:

If you purchased T-bills via your CPF Special Account or Ordinary Account, you can check the CPFIS statements sent by your agent bank.

2. Bank's Online Platforms:

Most banks in Singapore also offer online services where investors can view their T-Bill holdings. If you purchased your T-Bills through a bank, you could use their online banking platform to keep track of your investment.

3. Regular Statements:

Investors typically receive regular statements (either electronically or in paper form) detailing their T-Bill holdings and any transactions made.

By regularly checking their T-Bill holdings, you can stay informed about your current investments and make timely decisions based on your financial goals.

How to Sell T-Bills

Investors who hold T-Bills and wish to liquidate them before maturity can do so on secondary markets, which are platforms for buying and selling existing securities. Here are the factors to consider if you want to sell your T-bills on the secondary market:

1. Price Fluctuations:

The selling price of T-Bills in the secondary market can vary based on current market interest rates and demand for these securities. If market rates have risen since the T-Bills were issued, their selling price might be lower, leading to a potential loss. Conversely, if market rates have fallen, the T-Bills might sell for a price higher than their purchase price, resulting in a gain.

2. Transaction Process:

To sell T-Bills, you would typically need to go through a broker or financial institution that deals in government securities.

3. Timing:

Selling before maturity provides flexibility but also introduces the risk of price fluctuation, unlike holding the T-Bills to maturity.

Are T-Bills a Good Investment?  

Here is a quick comparison between the returns earned from investing in T-bills and leaving your money in fixed deposit accounts.

The table presents data current as of March 2025. The main idea is not about relevance, but to show you that T-Bill is profitable.

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Investing in Treasury Bills (T-Bills) is a popular choice for many investors, particularly those seeking a stable and low-risk investment option. However, like any financial instrument, T-Bills come with their own set of advantages and disadvantages. Understanding these can help investors make informed decisions that align with their financial goals and risk tolerance.

Pros and Cons of Investing in T-Bills

Below is a table summarizing the key pros and cons of investing in T-Bills:

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1. Low Risk:

T-Bills are considered one of the safest investment options available. Since they are short-term debt instruments issued by the government, the risk of default is extremely low.

2. Government-Backed:

The backing of the government provides an additional layer of security, making T-Bills a highly reliable investment.

3. High Liquidity:

T-Bills can be easily converted into cash due to their short maturity period. However, while they can be sold in the secondary market, liquidity is limited, meaning selling before maturity may result in lower-than-expected returns.

Conversely:

1. Lower Returns:

The safety and stability of T-Bills come at the cost of lower returns compared to other investment options like stocks or long-term bonds.

As of March 2025, T-Bill yields have decreased from 3.7% in early 2024 to around 2.75% - 2.95%.

2. No Regular Income:

Unlike certain bonds that pay periodic interest, T-Bills do not provide regular income. The return is fully realized at maturity, which can be 6 or 12 months depending on the selected tenor.

3. Market Risk:

While T-Bills are low-risk in terms of credit risk, they are still subject to market risk. Liquidity in the secondary market remains limited, so selling before maturity may result in lower returns if market interest rates have risen.

Investing for more income (and risk)

Investing in Treasury Bills is a safe choice, ideal for those who prioritize stability and capital preservation, albeit with lower profit margins.

However, for investors seeking higher returns and willing to accept an average risk level, Kilde offers a compelling alternative.

Kilde is an innovative investment platform that stands out for its potential to deliver high yields, with returns up to 13.5% p.a., significantly higher than typical market rates. The platform eliminates transaction costs, allowing for more efficient investment growth.

It provides access to a diverse range of carefully vetted senior secured private credit deals, combining quality with variety. Kilde simplifies the investment process with pre-prepared opportunities, saving time and effort for investors.

Final Thoughts on Treasury Bills in Singapore

All in all, Treasury Bills in Singapore remain a secure and stable investment option, particularly appealing for those prioritizing safety and capital preservation. However, yields have declined from around 3.7% in early 2024 to approximately 2.75% - 2.95% in early 2025, making them slightly less attractive compared to the previous year.

With government backing and a fixed return at maturity, T-Bills are an ideal choice for conservative investors. While they can be sold before maturity, secondary market liquidity remains limited, and selling early may result in lower returns if interest rates rise.

However, for investors seeking higher returns and willing to take on more risk, Kilde offers alternative avenues with potential annual yields of up to 13.5%, compared to T-Bill rates of around 2.75% - 2.95%.

It is important for investors to remember that T-Bills, while low in risk, also offer lower returns and do not provide regular income. The choice to invest in T-Bills, SSBs, SGS Bonds, or alternative platforms like Kilde should be based on individual financial goals, risk tolerance, and investment horizons.

As the investment landscape continues to evolve, staying informed about current T-Bill auction yields, fixed deposit promotions, and alternative investment opportunities is crucial for making the best financial decisions.

Whether opting for the safety of T-Bills or exploring other investment avenues for higher returns, the key is to align your investment choices with your long-term financial objectives and risk appetite. Always consider consulting with a financial advisor to make the most informed and beneficial investment decisions.

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Sources:

1. www.mas.gov.sg/bonds-and-bills/singapore-savings-bonds
2. www.mas.gov.sg/bonds-and-bills/treasury-bills-statistics
3. www.mas.gov.sg/bonds-and-bills/auctions-and-issuance-calendar

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_{*KILDE PTE LTD (“Kilde”) is incorporated in Singapore (registration no. 201929587K) is licenced and regulated by the Monetary Authority Singapore and holds a Capital Markets Services Licence (CMS101016) and an Exempted Financial Advisor License under the Financial Adviser Act. The information provided in this marketing material is intended for “accredited investors” and “institutional investors” (collectively “qualified persons”) only. This marketing material, and any information in this marketing material, or any documentation that Kilde provides in relation to this marketing material is provided without any representation or any kind of warranties whatsoever (whether express or implied by law).}

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