Understanding Treasury Bills (T-Bills) and How to Buy Them in Singapore

Treasury Bills Singapore

Looking to make your money work harder than a traditional savings account? Treasury Bills Singapore (T-Bills) might just be the answer. In this guide, we break down everything you need to know about T-Bills and how you can get your hands on them in Singapore.

What Are Treasury Bills (T-Bills)?

Treasury Bills, often referred to as T-bills, are a type of short-term investment offered by the Singapore government. They are part of the broader category of Singapore Government Securities (SGS), which are considered one of the safest investment options due to the backing of the Singapore government. T-Bills are essentially IOUs from the government with a promise to pay back the full amount upon maturity, making them a reliable investment choice.

Features of T-Bills

T-Bills are issued in either a 6-month or 1-year term and are known as “zero coupon bonds.” This means they do not pay interest like traditional bonds. Instead, they are sold at a discount to their face value and redeemed at full value upon maturity. For instance, if you buy a $1,000 T-Bill at a discount, you’ll receive the full $1,000 when it matures, effectively earning you the interest.

T-Bills & SGS Bonds Are Sold Under A Uniform Price Auction Method

When you apply for T-Bills or SGS bonds, you can choose between two types of bids: competitive and non-competitive.

  • Competitive Bid: You specify the price (in terms of percentage yield) you’re willing to pay. A lower yield means a more competitive bid.
  • Non-Competitive Bid: You won’t need to specify a price. Instead, you’ll receive the bonds or bills at a yield determined by the competitive bids.

If you make a non-competitive bid, you have a better chance of getting what you want because these bids are fulfilled first. Then, whatever is left goes to those who made competitive bids.

Upcoming Issuances

Investors keen on Treasury bills should pay attention to upcoming issuances, as they provide opportunities to participate in auctions and acquire these securities. Two upcoming issuances are noteworthy:

ISIN Code: BS24107N

    • Announcement Date: April 3, 2024
    • Auction Date: April 11, 2024
    • Issue Date: April 16, 2024
    • Tenor: 6 Months

ISIN Code: BS24108V

    • Announcement Date: April 18, 2024
    • Auction Date: April 25, 2024
    • Issue Date: April 30, 2024
    • Tenor: 6 Months

Investors have the option to make competitive or non-competitive bids in these auctions, depending on their preferences and market outlook. Non-competitive bids, in particular, offer a higher chance of securing allotments, making them attractive for retail investors.

Why Invest in T-Bills?

Singapore Treasury Bills

T-Bills offer several benefits for investors. They are a safe and secure investment option, providing a fixed interest payment at maturity. Additionally, they serve as a useful tool for diversifying your investment portfolio. However, it’s essential to note that while Singapore Treasury Bills provide stability, they might not yield high returns compared to riskier investments.

How to Buy Treasury Bills Singapore

Purchasing Treasury Bills Singapore is a straightforward process. The government issues 6-month T-Bills every two weeks and 1-year T-Bills every three months. To buy T-Bills, you can use cash, Supplementary Retirement Scheme (SRS) funds, or CPF Investment Scheme funds.

Cash Applications

If you opt for cash applications, you’ll need a bank account with one of the local banks and an individual Central Depository (CDP) account. You can apply for T-Bills through the bank’s ATMs or internet banking portals.

SRS Applications

For SRS applications, you’ll need an SRS account with one of the SRS operators. You can apply for T-Bills through your SRS operator’s online banking portal.

CPFIS Applications

If you prefer using CPF Investment Scheme funds, you’ll need a CPF Investment Account with one of the CPFIS agent banks. You can apply in person at any branch of the CPFIS bond dealers.

Selling T-Bills

Should you need to sell your T-Bills before maturity, you can do so through any of the local banks’ main branches. Keep in mind that the selling price may vary depending on market conditions.

Conclusion

Treasury Bills Singapore offers a secure way to invest your money while earning a modest return. By understanding how T-Bills work and the process of buying and selling them, you can make informed decisions to grow your wealth effectively.

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