Here's what to expect for the T-bill auction on 27 Feb

What happened?

Despite the fall in T-bill yields, many investors still seem to be watching the upcoming auction closely.

After all, some may be hoping that the cut-off yield for the upcoming 6-month Singapore T-bill auction (BS25104H) on 27 February 2025 may rebound from the yield of 2.90% in the previous auction.

I have also seen some questions in the Beansprout community about whether there will be loss of additional CPF interest for CPF-OA applications in the upcoming auction. 

In this post, I will be looking at the latest indicators to find out if it might still be worthwhile applying for the upcoming T-bill auction. 

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Here's what to expect for the Singapore T-bill auction on 27 Feb

#1 – US bond yields have remained stable

The 10-year US government bond yield was at 4.4% on 21 February, largely unchanged from the beginning of the month. 

This may be attributed to US President Trump’s announcement to delay new tariffs until April 1, easing market fears of escalating trade tensions.

Similarly, US short-term bond yields have remained stable. 

The 1-year US government bond yield has stayed at around 4.2% since the beginning of February. 

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

We have seen a similar trend in Singapore government bond yields, where longer-term bond yields have been stable.  

The Singapore 10-year government bond yield was at 2.8% on 21 February, largely unchanged since the start of the month.

At the same time, shorter maturity bond yields have also remained stable. 

The closing yield on the 6-month T-bill was 2.91% on 20 February, just slightly above the cut-off yield of 2.90% in the previous T-bill auction on 13 February.

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 2.91% in the auction on 18 February, falling further from 2.99% in the auction on 11 February.

#3 – Potential loss of additional CPF interest

I saw a question in the Beansprout telegram community about whether there will be a loss of additional CPF interest in the upcoming auction on 28 January. 

Here, it is worth noting that the T-bill auction date is on 27 Feb, the issuance date is on 4 March 2025 and the maturity date is on 2 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.

This means that there will be potentially 8 months of CPF interest loss from February to September.

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. 

However, as a member in the Beansprout community pointed out, the loss of two additional months of CPF interest may matter more if you plan to stop investing in the T-bill and transfer the fund back to your CPF account. 

If you intend to roll over to an upcoming T-bill when the existing one matures, then the impact may not be as significant. That said, the cut-off yield of 2.9% in the previous auction is also below the breakeven yield for CPF applications. 

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.

The issuance size of the upcoming 6-month Singapore T-bill is $7.5 billion, higher than S$7.3 billion in the previous auction. 

This would also represent the largest amount of 6-month T-bills being auctioned. 

We saw a surge in the amount of T-bill applications to $23.3 billion in the auction on 13 Feb, reaching a record high. 

However, with the fall in the cut-off yield to below 2.9%, there may be less applications in the upcoming auction. 

As a result, the larger issuance size might help to support the T-bill yields. 

What would Beansprout do? 

The closing yield on the 6-month Singapore T-bill was at 2.91% on 20 February, stable from the cut-off yield in the previous auction.

This is because the yield on shorter maturity bonds have remained fairly stable in the past few weeks.

The closing yield on the 6-month Singapore T-bill yield, would be above the best 6-month fixed deposit rate of 2.75% p.a., as banks have cut their interest rates in February 2025. 

The yield on the 6-month Singapore T-bill would be lower than the interest rates offered by the best savings account in Singapore. 

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

You can find out what is the breakeven yield on the Singapore T-bill for CPF applications using our CPF-T-bill calculator.

The 6-month Singapore auction will be held on 27 February (Thursday). We would need to put in our cash applications for the T-bills by 9 pm on 26 February (Wednesday).

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• Reminder for Tbill

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 26 Feb (Wed). Read our step-by-step guide to applying via DBS.
• Application for T-bills online using CPF OA via OCBC close at 9pm on 26 Feb (Wed). Read our step-by-step guide to applying via OCBC
• Applications for T-bills online using CPF OA via UOB close at 9pm on 25 Feb (Tue). 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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