Summary

• T-bill cut-off yield continues to decline, reaching a new low of 1.38%.
• Demand for T-bills remains strong, but investors are looking for better alternatives.
• BigFundr provides superior interest rates at competitive flexibility without compromising on capital safety.

The Singapore six-month T-bill cut-off yield fell further to 1.38% from the previous auction’s 1.44%. This marks the new lowest yield this year and is the 13th consecutive decline, a continuing trend that began on 26 March.

T-bill yields are expected to continue to fall.

Strong Demand For Safe-Havens

The auction this time received a total of S$15.7 billion in applications for the S$7.8 billion on offer, a bid-to-cover ratio of 2.02. In comparison, the previous auction received a total of S$18.4 billion in applications for the S$7.7 billion on offer, a 2.39 bid-to-cover ratio. While this auction’s ratio is slightly lower than the previous auction, it still reflects the market’s robust interest in these low-risk assets.

The bid-to-cover ratio measures the demand for a government security by comparing the total value of bids received to the total amount of securities offered for sale. The higher the ratio, the more in demand the asset is.

As mentioned in our previous post, the sharp decline in yields is influenced by expectations of a series of Fed rate cuts. As such, not only are T-bill yields on the decline, but so are interest rates of bank accounts and fixed deposits. While this may dampen the enthusiasm of investors looking for a higher return, many still see the value in T-bills—and more broadly, other conservative instruments— as a secure place to park their funds. 

The recent parliamentary motion to raise the government's issuance limit to S$1.515 trillion signals a long-term commitment to a steady supply of government securities.

How Do Other Safe-Haven Alternatives Compare

With yields falling, investors have been looking for alternatives that pay higher interest. Below shows a table comparing 12-month fixed income instruments by BigFundr, the Singapore Government and other market alternatives.

Source: MAS T-bills | MAS SSB | Beansprout

Note: Figures for banks and non-bank financial institutions are averages.

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