Here's what to expect for the T-bill auction on 26 March

What happened?

The next 6-month Singapore T-bill auction (BS25106X) will be coming up on 26 March 2025.

After the recent sharp fall in yield on the SIngapore T-bill, there appears to be less discussion about the T-bill  in the Beansprout community. 

However, applications for the T-bill has remained fairly high in the the past weeks. 

As such, I thought it might still be worthwhile looking at the latest indicators to find out what to expect for the upcoming T-bill auction. 

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Here's what to expect for the Singapore T-bill auction on 26 March

#1 – US bond yields have been stable 

The 10-year US government bond yield was at 4.2% on 21 March, little changed from where it was earlier this month. 

In the past month, we have seen US government bond yields coming under pressure is due to growing concerns about a sharp economic slowdown in the US, with recent data showing a drop in consumer spending amid tariff uncertainty. 

Similarly, the yields on US government bonds with shorter maturities have been fairly stable. The 1-year US government bond yield was at 4.0% on 21 March, little changed from where it was at the start of the month.

#2 – Closing yield on 6-month Singapore T-bill stable 

Singapore bond yields have also been fairly stable. 

The Singapore 10-year government bond yield was at 2.7% on 21 March, as it has held steady so far this month. 

Likewise, the closing yield on the 6-month T-bill was 2.57% on 20 March , little changed from the cut-off yield of 2.56% in the previous T-bill auction on 13 March.

The yield on the 3-month MAS bill can also give an indication of the yields for shorter-maturity Singapore government bonds.

The cut-off yield was at 2.67% in the auction on 18 March, falling further from 2.78% in the auction on 4 March, but rebounding slightly from the cut-off yield of 2.62% in the auction on 11 March. 

#3 – Potential loss of additional CPF interest 

With the upcoming auction happening close to the end of the month, many investors would naturally be worried about a loss of additional CPF interest in the upcoming auction on 26 March. 

Here, it is worth noting that the T-bill issuance date is on 1 April 2025 and the maturity date is on 30 September 2025. 

Based on sharing from the Beansprout community, the deduction for successful CPF applications is typically done one business day after the auction date. 

However, if you are looking to transfer funds back to your CPF OA following the maturity of the T-bill, there may be potentially 8 months of CPF interest loss from March to October.

The loss of additional CPF interest will mean that the break-even yield for the T-bill auction will be higher. 

To find out if it might still be worthwhile applying for the T-bill using CPF with the loss of additional CPF interest, you can check out our CPF-T-bill calculator. 

The issuance size of the upcoming 6-month Singapore T-bill is $7.4 billion, slightly smaller than the amount offered in the previous auction of $7.5 billion. 

In the past, we have seen lower demand for the T-bill when there is additional CPF interest loss, as there may be less applications using CPF funds.

We saw a slight decline in the amount of T-bill applications to S$19.8 billion in the auction on 13 March from S$20.1 billion in the auction on 27 February. 

Should demand for the T-bill weaken further, this may provide some support to the T-bill yield. 

What would Beansprout do?

The closing yield on the 6-month Singapore T-bill was at 2.57% on 20 March, stable from the cut-off yield in the previous auction.

For CPF investors, it is important to note the potential loss of additional CPF interest in the upcoming auction.. 

Despite the decline in the T-bill yield, the closing yield on the 6-month Singapore T-bill yield would be above the best 6-month fixed deposit rate of 2.50% as banks have cut their interest rates in March 2025. 

However, the yield on the 6-month Singapore T-bill would be below the interest rates offered by the best savings accounts in Singapore. 

For example, the UOB Stash account offers an interest rate of up to 3.0%. In addition, you can get an additional S$388 cash credit when you top up S$100,000 new funds into your UOB Stash Account by combining with the UOB Lunar New Year Pot of Gold promotion.

You can compare the yield for T-bills with fixed deposits and savings accounts here to find out where is the best place to park your savings. 

With the upcoming public holiday, the 6-month Singapore auction will be held on 26 March (Wednesday). We would need to put in our cash applications for the T-bills by 9 pm on 25 March (Tuesday).

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Applications for the T-bills using CPF-OA will close 1-2 business days before the auction date, and the dates differ across the three local banks.

• Applications for T-bills online using CPF OA via DBS close at 9pm on 25 Mar (Tue). Read our step-by-step guide to applying via DBS.
• Application for T-bills online using CPF OA via OCBC close at 9pm on 25 Mar (Tue). Read our step-by-step guide to applying via OCBC
• Applications for T-bills online using CPF OA via UOB close at 9pm on 24 Mar (Mon). Read our step-by-step guide to applying via UOB. 

If you are new to investing in the T-bill, check out our comprehensive guide to Singapore T-bills to learn more.

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