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Singapore 6-month T-bill interest rate reached 2.99% per annum!

01 Sep 2022

The Singapore 6-month Treasury-bill (T-bill) is our preferred option to park our spare cash as the interest rate is hard to beat.

Singapore T-bill SGS Bond

What happened? 

There was something that got our Telegram community excited today. 

No, they were not talking about the increase in interest rates by on OCBC 360 or UOB One. Neither were they talking about the launch of GXS digital bank by Grab and Singtel, or Trust bank by Stanchart and NTUC. 

Instead, many were cheering the allotment result of the latest Singapore 6-month Treasury-bill (T-bill).

Investors who subscribed to the Singapore 6-month T-bill in the 1 September auction will receive a yield of 2.99% per annum. 

More importantly, compared to the Singapore Savings Bonds (SSB) where investors were only allotted up to a maximum limit of S$13,500 in the latest auction, 100% of applicants who submitted non-competitive bids for the 6-month T-bill received full allocation! 

Source: MAS

What we learnt from the Singapore 6-month T-bill allotment result

Growing demand for 6-month treasury bill

One clear trend that caught our attention, is that the demand for the Singapore 6-month T-bill amongst Singapore investors is increasing. 

As we shared in our earlier article on “Time to look at SGS Bonds (Aug 2022)”, individual investors typically apply for the 6-month T-bill using non-competitive bids. 

The total amount non-competitive bids submitted increased to S$447 million in the latest auction compared to S$327 million in the previous auction on 18 August 2022. 

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Source: MAS

In fact, the amount of non-competitive bids for the Singapore 6-month T-bill has increased over the past few auctions. Just over a month ago, the Singapore 6-month T-bill auction on 21 July received just S$190 million worth of bids. 

This might be one of the reasons for the lower demand for the most recent Singapore Savings Bonds, as Singaporeans learn about the T-bill and SGS Bond and find that they can earn a decent interest rate through these assets too. 

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The other interesting observation for us is that the yield on the latest Singapore 6-month T-bill of 2.99% is just slightly above the yield in the previous auction of 2.98%. 

As seen in the chart below, the yield on the Singapore 6-month T-bill has continued to rise over the last two weeks. 

In fact, it has gone up by about 0.06 percentage points over this period. 

The fact that the cut-off yield for the Singapore 6-month T-bill has increased by just 0.01 percentage point, once again show that there is more interest in the 6-month T-bill. 

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Source: Tradingview

What would Beansprout do? 

The Singapore 6-month T-bill is still our preferred option to park our cash as the interest rate is hard to beat for any deposit account or cash management account in the market. 

However, we would not put all our spare cash into the T-bill/SGS bond, as it might not be easy to buy and sell after issuance. 

This is where the Singapore Savings Bond (SSB) and other deposit accounts would be useful for diversification purposes. 

Also, while the interest rate reached 2.99% in the latest auction, there is no guarantee on the expected yield for the next auction. 

As we all know, the macro environment remains very uncertain, and the yield for the next auction will depend on the global interest rate environment as well as demand from investors. 

If you are keen, the next auction for the Singapore 6-month T-bill auction will happen on 15 September 2022, which means that you’ll need to apply by 9pm on 14 September. 

Find out more about how to apply for the Singapore Treasury-bill or SGS Bond here. 

Join our Telegram group if you have any questions about the the Singapore Treasury-bill or SGS Bond!