T-bill yield rebounds to 2.73% as demand dives

What happened?

Many investors appear surprised by the result of the latest T-bill auction.

The cut off yield for the 6-month Singapore T-bill (BS25106X) auction on 26 March rebounded to 2.73% from 2.56% in the previous auction.

This is despite bond yields being fairly stable in the past week. 

This led to congratulatory comments in the Beansprout Telegram community for those who successfully applied for the T-bill. 

In this post, I will look at what is driving the rebound in the T-bill yield.

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What we learnt from the latest 6-month Singapore T-bill auction

#1 - Demand for the Singapore T-bill fell

The total applications for the 6-month Singapore T-bill declined S$15.8 billion from S$19.8 billion in the previous auction.

This marks the lowest amount applications for the T-bill since the 28 January auction, which had S$15.3 billion of applications. 

The amount of competitive bids decreased to S$14.4 billion from S$17.9 billion in the previous auction. 

If you placed a competitive bid below 2.73%, you would receive 100% of your requested T-bill allocation.

If you bid at exactly 2.73%, the allocation would be around 3%. 

The amount of non-competitive bids fell to S$1.4 billion from approximately S$1.9 billion in the previous auction.

Since the amount of non-competitive bids was within the allocation limit, all eligible non-competitive bids received full allocation for the T-bill. 

#2 - Applications fell at a faster pace compared to T-bills issued 

The amount of T-bills issued fell slightly to $7.4 billion from $7.5 billion in the previous auction. 

With total applications declining from S$19.8 billion to S$15.8 billion, the ratio of applications to T-bills issued fell sharply from 2.64x to about 2.14x.

The lower amount of T-bill applications compared to the issuance size likely contributed to the rebound in the T-bill cut-off yield.

The fall in the applications is likely driven by both lower cash and CPF applications with the dive in the T-bill yield in the previous auction. 

#3 - Increase in demand for Singapore Savings Bond (SSB)

The fall in the applications for the T-bill stands in contrast to the increase in applications for the latest Singapore Savings Bond (SSB). 

Applications for the SSB SBAPR25 GX25040F rose from S$639 million last month to about S$678 million, representing the highest level since September 2024. 

However, as this remains below the S$700 million of SSBs being issued, all eligible applicants within their allotment limits were allotted the latest SSB.  

In our view, the shift in demand likely reflects the higher 10-year average interest rate that the latest SSB offers compared to the cut-off yield of the 6-month Singapore T-bill. 

#4 - Median yield of bids submitted rose

The median yield of bids submitted increased to 2.60% from 2.50% in the previous auction.

The average yield of bids submitted increased to 2.54% from 2.41%. 

The rise in the average yield is likely due to less applications using CPF-OA funds in the latest auction.

Given the median yield and the cut-off yield, this suggests that a substantial number of bids were placed in the 2.60% to 2.73% range, above the best fixed deposit rate in Singapore. 

What would Beansprout do? 

The rebound in the T-bill yield to 2.73% seems to be driven by a fall in demand with the lower yield in previous auctions. 

As a result, investors may have shifted their holdings towards other safe options such as the SSB, where we have seen an increase in demand. 

With this rebound in the cut-off yield on the T-bill, it is now above the best 6-month fixed deposit rate in Singapore as banks have cut their interest rates in March 2025. 

However,  it would still be below the break-even yield for CPF OA applications, based on calculations using our CPF T-bill calculator.

Despite the bounce in the T-bill yield compared to the previous auction, it is still below the yield at the start of the year. As such, I would still be looking for ways to allow my savings to earn a higher yield in a relatively safe way.

For example, many in the Beansprout community have been discussing the UOB Stash account, which offers an interest rate of up to 3.0% p.a. for $100,000 of deposits.

I also shared how bond funds such as the United SGD Fund allow us to gain exposure to a basket of bonds which may see potential price appreciation if interest rates come down. 

I would also consider selected high quality Singapore REITs which may offer a higher dividend yield compared to the T-bill yield too. Find the best Singapore REITs here. 

If you are interested in applying for the T-bill, the next 6-month T-bill auction will be on 10 April. You can set a reminder by signing up for our free email alert below.

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