Treasury Bills (T-bills) & Singapore Government Securities (SGS)

What it is

T-bills and SGS bonds are the wholesale end of Singapore government debt, opened up to retail investors through periodic auctions. T-bills are short-dated (6-month and 1-year), sold at a discount to face value with the return realised at maturity. SGS bonds span much longer tenors (2, 5, 10, 15, 20, 30, and 50-year), paying a fixed coupon semi-annually.

Unlike SSB, both are typically held to maturity or sold on the secondary market if you need to exit early. There's no built-in penalty-free redemption window, so the price you get on early exit depends on where market yields have moved.

How it's structured

• T-bills: sold at a discount, no coupon -- you receive face value at maturity, with the discount representing your return.
• SGS bonds: pay a fixed coupon every six months and return face value at maturity; price fluctuates on the secondary market before then based on prevailing yields.
• Both are auctioned periodically (T-bills roughly fortnightly to monthly depending on tenor; SGS less frequently) and can be applied for via CPF Investment Scheme funds, SRS, or cash through local bank ATMs/brokerages.
• Full principal and coupon guarantee by the Singapore government if held to maturity.

How the auction actually works

Every T-bill and SGS auction is a uniform-price auction: every successful bidder is allotted at the same cut-off yield, regardless of what yield they individually bid.

• Competitive bids: you specify the yield you're willing to accept. MAS ranks all competitive bids from lowest to highest yield and fills the auction amount in that order -- the cut-off yield is the highest yield among the bids accepted.
• Non-competitive bids: you accept whatever the cut-off yield turns out to be, without specifying one yourself. These are allotted first, before competitive bids, but are capped at 40% of the total amount on offer -- the option most individual retail applicants use.
• Bids below the cut-off yield are filled in full; bids exactly at the cut-off may be partially filled on a pro-rated basis; bids above the cut-off get nothing.

What kind of return to actually expect

Recent auction yields have generally placed 6-month T-bills and 1-year T-bills in the 2.5%–3.5% p.a. range, with longer SGS tenors' yields shaped by the broader rate curve at auction time. These move with each auction and should be checked against the current MAS auction results rather than assumed static.

Because T-bills and SGS trade on secondary markets, selling before maturity means your return depends on where market yields have moved since you bought -- rates up since purchase generally means a lower resale price, and vice versa.

The risks, plainly

• Interest rate / price risk on early exit -- sell before maturity and the price reflects current market yields, which can be below what you paid if rates have risen.
• No penalty-free redemption window -- unlike SSB, there's no built-in mechanism to exit at par before maturity.
• Reinvestment risk at maturity -- short T-bill tenors mean you'll need to redeploy the proceeds at whatever rate is available when it matures.
• Auction allocation -- a competitive bid above the eventual cut-off yield, or a non-competitive queue beyond the 40% cap, can mean your application is only partially filled.

Who it tends to suit

Suits investors comfortable holding to a fixed maturity date and who want to ladder maturities or lock in a specific tenor's yield through the auction process itself. Someone who'd rather not think about bid mechanics or cut-off yields at all is usually better served starting with SSB, which skips the auction entirely.

This describes how this type of product is typically used -- it isn't a recommendation for your specific situation. Talk to a licensed adviser before deciding.

Common questions

What's the difference between a T-bill and SGS bond?

T-bills are short-dated (6-month or 1-year) and sold at a discount with no coupon. SGS bonds span longer tenors (2 to 50 years) and pay a fixed coupon every six months.

Can I sell a T-bill or SGS bond before maturity?

Yes, on the secondary market, but the price you get depends on prevailing market yields at that time, unlike SSB's guaranteed par-value early redemption.

Can I buy these with CPF money?

Yes, both are eligible for purchase under the CPF Investment Scheme, subject to the usual CPFIS rules and limits.