T-bill yield falls to 3.85%. Here's what is driving the decline



By Beansprout • 20 Jul 2023 • 0 min read

The cut-off yield for latest Singapore 6-month T-bill fell to 3.85% from 3.99% in the previous auction.

T-bill auction result 20 July 2023

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What happened?

The cut-off yield for the latest Singapore 6-month T-bill auction (BS23114A) on 20 July fell to 3.85%.

This might be a disappointment to some investors who were attracted to the 6-month T-bill after the cut-off yield reached 3.99% in the previous auction.

Let’s take a deep dive into what might be causing the decline in the yield on the 6-month T-bill. 

Source: MAS


What we learnt from the latest T-bill auction

#1 – Increase in amount of competitive bids

The total amount of applications for the latest T-bill was at S$12.2 billion, a significant increase from S$10.3 billion in the previous auction

This is driven largely by a sharp rise in the amount of competitive bids to S$10 billion from S$8.1 billion in the previous auction. It would also represent the highest amount of competitive bids since 25th May.

It would seem like the higher cut-off yield in the previous auction has led to more bids for the 6-month T-bill once again.



#2 – T-bill issuance size larger than in the past

Eligible non-competitive bids received 100% allocation in this auction, unlike the previous auction where non-competitive applications were only able to receive about 96% of their bid amounts. 

The amount of non-competitive bids was similar to the previous auction at S$2.2 billion.

However, as the amount of T-bills offered increased to S$5.6 billion in the latest auction from S$5.4 billion in the previous auction, the amount of non-competitive bids now represent slightly less than 40% of the T-bills offered in the auction . 

#3 – Median yield of bids submitted rose

While the cut-off yield fell in the latest T-bill auction, we saw higher average and median yields of bids submitted.

The median yield rose to 3.65% from 3.50% in the previous auction.

The average yield rose to 2.88% from 2.87% in the previous auction.

Hence, it would seem like the lower cut-off yield in the latest auction auction is largely driven by more applications submitted, and a sizeable portion of these bids being placed in the range of 3.65% to 3.85%. 

This would mirror the fall in US government bond yields in recent weeks

Source: MAS


What would Beansprout do?

Despite the fall in cut-off yield compared to the previous auction, the 6-month T-bill still offers a fairly decent yield of 3.85%.

This is higher than the best 6-month fixed deposit rate of 3.50%, and also the interest rate offered by GXS bank's savings account of 3.48%.  

If you missed out on the latest T-bill auction, the next 6 month T-bill auction will be held on 3 August. There will also be a 1-year T-bill auction on 27 July

In the meantime, you can consider parking your savings in various cash management accounts or savings accounts to make your idle cash work harder. 

Check out our CPF-Tbill calculator to find out how much more interest you can potentially earn by investing in the Singapore T-bill using your CPF Ordinary Account (OA) savings.

Join our telegram group for the latest updates on Singapore bonds, stocks, REITs and ETFs. 

Make your CPF savings work harder

Use our CPF-Tbill calculator to find out how much more interest you can potentially earn by investing in the Singapore T-bill using your CPF OA savings.

Calculate now

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