Singapore's six-month Treasury bill auction on September 1 delivered a cut-off yield of 1.60% per annum, marking the highest level since December and a 24 basis point increase since February. The yield comfortably exceeds the standard six-month promotional rates offered by major local banks—UOB at 1.30% and OCBC at 1.25%—making the T-bill an attractive option for cash investors with modest balances.
The Monetary Authority of Singapore (MAS) confirmed the cut-off for the BS26117A issue, which settled on September 1. The rising trajectory reflects a combination of global bond weakness and domestic factors. DBS strategist Eugene Leow noted, “Between higher bill cutoffs, slower deposit growth and robust loan growth, upward pressure on rates is materialising.”
For an investor placing S$50,000 in the latest T-bill, the return over 182 days is approximately S$399, compared with S$324 at UOB's 1.30% rate and S$312 at OCBC's 1.25% online offer. However, some promotional deposit products can outpace the T-bill. OCBC's September top-up offer blends to about 1.653% annually for qualifying fresh funds of at least S$50,000, but it comes with conditions on incremental balances and lock periods.
The comparison shifts for Central Provident Fund (CPF) members. The Ordinary Account currently earns 2.50% per annum, which is 90 basis points higher than the T-bill. On S$50,000, that translates to an opportunity gap of roughly S$224 over six months before timing effects. While T-bills can be purchased through the CPF Investment Scheme, the CPF floor rate makes bank deposits or CPF itself more compelling for eligible balances.
Looking ahead, the next auction (BS26118E) is scheduled for Thursday, with an announced size of S$8.4 billion and settlement on September 15. Analysts estimate the cut-off could land between 1.49% and 1.66%, with the secondary benchmark at 1.57% on Friday. The final yield will be determined by investor demand in a uniform-price auction; heavy demand could push the cut-off below the secondary-market reference.
For those considering longer maturities, October's Singapore Savings Bond (GX26100Z) offers a first-year rate of 1.65% and an average of 2.32% over ten years, with monthly redemption flexibility. This may appeal to investors seeking liquidity and a longer horizon.
Thursday's auction will reveal whether tighter local liquidity has reached retail government paper. A cut-off near 1.60% would preserve the T-bill's edge over ordinary deposits, while a result below 1.30% would hand the lead to UOB. Above 1.65%, the bill would also surpass the Savings Bond's first-year rate. The primary risk remains reinvestment—six months of yield says little about rates available in March—and secondary market fluctuations if sold before maturity.
