What is T-bill and How T-bill Auction Works

If you’ve been looking for a low-risk, predictable investment backed by the Singapore government, you’ve probably come across Treasury Bills (T-bills). 

These short-term government securities are zero-coupon securities, meaning they are issued at a discount and do not pay periodic interest. Investors receive the full face value upon maturity.

Singaporeans love T-bills because they offer government-backed security, upfront interest payments, and better returns than traditional savings accounts, making them an attractive choice for capital preservation. 

However, with T-bill yields declining after the rate hikes in 2023-2024, investors are wondering what’s next. In 2025, T-bill rates will largely depend on global interest rate movements, inflation trends, and investor demand, meaning that strategizing your bids and reinvestments will be more important than ever.

But here’s the catch—T-bills aren’t like fixed deposits where you just walk into a bank and sign up. Instead, they are auctioned by the government, and your return depends on how you bid. 

This means that to make the most of T-bills, you need to understand how the auction works, the difference between competitive and non-competitive bidding, and how to optimize your strategy for maximum returns.

This guide will walk you through everything you need to know about T-bills in Singapore, including:

✅ How the auction works and how yields are determined

✅ Competitive vs. non-competitive bidding—which one should you choose?

✅ How to time your bids strategically based on market trends

✅ T-bill laddering & reinvestment strategies to maximize returns

✅ Alternative low-risk investments that offer better liquidity and flexibility

By the end of this guide, you’ll not only understand how to bid like a pro, but also know how to fit T-bills into your broader investment strategy. Let’s dive in!

Types of T-bills in Singapore

The Monetary Authority of Singapore (MAS) issues three types of T-bills:

How are Singapore T-bills allotted?

Singapore T-bills are allotted through a uniform-price auction system, which ensures that every successful applicant receives the same yield—known as the cut-off yield. This mechanism promotes transparency and fairness in how T-bills are distributed.

The cut-off yield is the highest accepted yield among successful competitive bids. Regardless of whether an investor submits a competitive or non-competitive bid, as long as the application is successful, the final yield awarded will be the same. 

The allotment process begins with non-competitive bids, followed by competitive bids, in that order.

Competitive vs. non-competitive bidding

There are two ways to apply for Singapore T-bills during an auction: non-competitive and competitive applications. 

Non-competitive applications

Non-competitive applications are ideal for investors who want to ensure they get an allotment without worrying about the yield. Investors in this category do not specify the yield they want. Instead, they agree upfront to accept whatever the cut-off yield is for that auction.

These applications are given priority in the allotment process and are allocated up to 40% of the total issuance size. If the total amount of non-competitive applications exceeds this 40% cap, the allotment is done on a pro-rata basis, and final allotment values are rounded to the nearest S$1,000 denomination using a randomised system.

Each individual investor can apply for up to S$1 million per T-bill auction under the non-competitive option.

Competitive applications

Competitive applications are meant for investors who want more control over the yield they receive. In this method, applicants submit a bid specifying the minimum yield they are willing to accept. 

However, there's no guarantee of allotment. Bids are ranked from lowest to highest yield, and allotment starts from the lowest yield upward until the remaining issuance amount (after non-competitive allotments) is fully awarded.

The highest yield at which the final portion of the issuance is awarded becomes the cut-off yield. Bids above the cut-off yield receive no allotment, and bids at the cut-off yield may receive partial allotment, depending on how much is left to distribute.

Competitive vs. non-competitive bidding: Which one should you choose?

One of the most critical decisions when participating in a T-bill auction is whether to submit a competitive or non-competitive bid.

What is competitive bidding?

A competitive bid allows you to specify the exact yield (interest rate) you’re willing to accept. If your bid is at or below the cut-off yield, you may receive full or partial allocation. However, if your bid is above the cut-off yield, you won’t get any allocation.

✅ Pros: Potential for a higher yield if market conditions are favorable.

❌ Cons: Risk of getting no allocation if you bid too high.

What is non-competitive bidding?

A non-competitive bid means you accept whatever the final cut-off yield is. While this removes control over your yield, it guarantees you a full allocation (provided there is sufficient issuance size).

✅ Pros: Guaranteed allocation, making it ideal for investors who prioritize certainty over maximizing returns.

❌ Cons: You might end up with a lower yield compared to successful competitive bidders who bid lower than the cut-off.

Which one should you choose?

Your choice between competitive and non-competitive bidding should depend on:

How T-bill yields are determined

Unlike fixed deposit rates that are pre-determined by banks, the yield on Singapore T-bills is discovered through an auction process—it reflects actual market demand.

The auction is managed by the Monetary Authority of Singapore (MAS), where both retail and institutional investors submit bids indicating the yield they are willing to accept. 

The final yield, known as the cut-off yield, is determined based on how these bids stack up against the total issuance size.

Here’s a step-by-step breakdown of how it works:

1. Investors submit bids

There are two types of bids in a T-bill auction:

• Non-competitive bids: You agree to accept whatever the final yield is.
• Competitive bids: You specify the minimum yield you’re willing to accept.

2. MAS ranks competitive bids

All competitive bids are sorted in ascending order by yield—from the lowest yield (most favorable to the government) to the highest.

3. Allotment begins

• Non-competitive bids are filled first, up to 40% of the total issuance.
• The remaining issuance is allocated to competitive bids, starting from the lowest yield upwards.

4. Determining the cut-off yield

As MAS continues allocating the remaining issuance to competitive bids, the process stops when the total auction size is fulfilled.

• The highest yield that still receives an allotment becomes the cut-off yield.
• This yield is awarded to all successful bidders, including those who bid lower or submitted non-competitive bids.

5. What happens if demand is high?

If there’s more demand than available T-bills:

• Bids above the cut-off yield receive no allotment.
• Bids at the cut-off yield may be partially allotted, depending on the remaining amount.

Example of how a T-bill auction works in practice

Here’s a simplified example that illustrates how allotments are made based on competitive and non-competitive applications:

Assumptions:

• Total T-bill issuance size: S$20,000
• Total non-competitive applications received: S$8,000
• Total competitive applications received: S$18,000

In this case, the non-competitive applications are within 40% of the total issuance (S$8,000 is 40% of S$20,000), so they will be fully allotted. The remaining S$12,000 will be allocated to competitive bids starting from the lowest yield offered.

Here’s how the allotment might look:

In this example, the cut-off yield is 4%, and all successful applicants (both competitive and non-competitive) will receive this yield—even those who bid at 1%.

Timeline breakdown: From application to maturity

T-bills operate on a strict auction and settlement schedule. Here’s what you need to know about how long the process takes and when you’ll receive your returns.

Auction announcement & bid submission

The process begins when the Monetary Authority of Singapore (MAS) announces an auction, detailing the issuance size, auction date, and settlement date. 

Investors must place their bids before the auction deadline, choosing either a competitive or non-competitive bid. 

Bids are submitted through participating banks or CPF/SRS investment accounts, ensuring investors have access to government-backed securities.

Results announcement & allocation

Once the auction is completed, MAS announces the results on the same day. Successful bidders who placed non-competitive bids are guaranteed allocation at the final cut-off yield, while competitive bidders are allocated based on their bid levels. 

Those who bid above the cut-off yield receive no allocation, while those who bid at or below it receive full or partial allocation depending on demand and issuance size.

Settlement & interest payout

The next business day, the settlement occurs, meaning the amount you bid is deducted from your account, and you receive your T-bill allocation. 

T-bill interest is paid upfront—investors purchase the bill at a discount and receive its full face value at maturity. For example, if you invest $10,000 in a 6-month T-bill with a 3.5% yield, you may only pay $9,825 upfront but will receive $10,000 at maturity.

Maturity & return of principal

After holding the T-bill for the full duration, the government returns your full principal upon maturity. 

If you invested using cash, the amount is deposited back into your bank account. If you used CPF or SRS funds, the proceeds are credited back to your investment account. Investors can then decide whether to reinvest in new T-bills or allocate their funds elsewhere.

Estimated timeline for a 6-month T-bill

📅 Auction Date → Submit bids (T-day)

📅 Results Announced → Same day as auction (T-day)

📅 Settlement Date → Funds deducted & T-bills issued (T+1 business day)

📅 Maturity Date → Full principal returned (T+6 months)

⏳ Total Duration: Approximately 6 months and 1 day

Where to check your Singapore T-bills holdings

Once your application for T-bills is successful, your holdings will be reflected in the respective account based on your mode of application. 

The timeline for reflection and where you can check the details varies depending on whether you applied using cash, SRS, or CPF funds:

How to calculate your actual investment amount from the T-bill cut-off yield

Singapore T-bills are not sold at face value—they’re issued at a discount. This means you pay less upfront than what you’ll receive at maturity. The cut-off yield from the auction determines how much of a discount you’ll get.

To calculate your initial investment (the amount you pay), MAS uses this standard discount pricing formula:

📘 Formula:

D = (M / 365) × R  

P = 100 – D

Where:

• D = Discount per S$100 face value
• M = Days to maturity (e.g., 182 days for a 6-month T-bill)
• R = Cut-off yield (expressed as a % per annum)
• P = Purchase price per S$100 face value

💡 Example: 6-month t-bill with 4.00% yield

Let’s say you’re allotted a 6-month T-bill with a maturity of 182 days, and the cut-off yield is 4.00%. Here’s how to compute the purchase price:

D = (182 / 365) × 4.00 = 1.9959  

P = 100 – 1.9959 = 98.0041 → rounded to S$98.005

So, for every S$1,000 in face value, your investment (amount paid) would be:

S$98.005 × 10 = S$980.05

You’ll receive S$1,000 at maturity, earning S$19.95 in interest per S$980.05 invested—without any reinvestment risk or price volatility.

How much T-bills can you apply for as a retail investor?

While there’s no minimum amount needed to apply for Singapore T-bills, there is a cap on how much you can be allotted, especially if you're applying in large sums. This cap ensures that the issuance is distributed fairly among all investors.

💰 Maximum allotment rules:

1. Overall allotment limit

The total amount—across both competitive and non-competitive bids—that an individual investor can be allotted is capped at 15% of the total T-bill issuance size for that auction. 

2. Non-competitive application limit

You can submit a non-competitive application of up to S$1 million per auction. However, getting the full S$1 million is not guaranteed. If the total non-competitive demand exceeds 40% of the issuance, MAS will pro-rate the allotment among all applicants.

📌 Key reminder:

Even if you apply for S$1 million non-competitively, you may receive less—depending on how many other investors also chose the non-competitive route.

This system keeps the process equitable and ensures a broad distribution of T-bills, especially during high-demand auctions.

T-bill interest rates & market trends

T-bill yields have been closely watched by investors, especially as global interest rates shift. Throughout 2023 and the first half of 2024, 6-month T-bill yields remained relatively stable, fluctuating between 3.60% to 3.80% without any major shifts.

However, in the second half of 2024, a clear downward trend began, continuing into 2025.

Recent trends in T-bill yields

The declining yields have been largely driven by changes in global interest rate expectations and increasing investor demand for risk-free assets. Let’s look at the past few T-bill allotment:

Source: MAS

Maximizing your T-bill investment

T-bills are already a great low-risk investment, but smart strategies can help you enhance your returns and improve liquidity.

Two key techniques used by experienced investors are T-bill laddering and strategic reinvestment timing.

T-bill laddering

T-bill laddering is a technique where investors spread out their T-bill purchases over multiple auctions rather than investing a lump sum all at once. 

This strategy creates a staggered maturity schedule, ensuring that part of your investment matures regularly, allowing you to:

✅ Reinvest at potentially higher yields if interest rates rise over time.

✅ Increase liquidity by having access to maturing funds at frequent intervals.

✅ Reduce interest rate risk, as you won’t be locking in all your capital at a single rate.

💡 Example of a 6-Month T-bill Ladder: Instead of investing $30,000 in a single T-bill, an investor might split it into three separate investments of $10,000, each made two months apart. This way, every two months, one T-bill matures, freeing up capital for reinvestment or withdrawal.

Reinvestment strategies

For those who want to maximize returns while keeping flexibility, reinvestment timing plays a crucial role. Here are some effective strategies:

• Rolling Over Maturities: Reinvesting the proceeds of a matured T-bill into a new auction, ensuring continuous exposure to T-bill yields.
• Observing Market Trends: If T-bill rates are trending downward, locking in rates earlier may be better. Conversely, if rates are rising, waiting for future auctions could secure better returns.
• Using CPF or SRS for T-bills: If investing through CPF or SRS, consider reinvesting your matured funds rather than leaving them idle, as T-bills often offer higher yields than CPF OA interest rates.

What are the alternatives to T-bills?

While T-bills are a solid low-risk investment option, they aren’t the only choice for investors seeking stability. 

Depending on your risk appetite, liquidity needs, and return expectations, there are other low-risk alternatives that might better suit your financial goals:

Updated as of 19 Apr 2025

Fixed Deposits (FDs): A More Predictable Option

FDs provide a guaranteed buy-in at a fixed rate, unlike T-bills, which depend on auction results. While FDs offer lower yields compared to T-bills, they are simpler to access and don’t require bidding strategies. 

However, liquidity is still limited as early withdrawal may result in penalties or loss of interest.

CPF Special Account (CPF SA): Long-Term Stability

CPF SA provides a guaranteed return of 4.00%, making it one of the safest investment options for Singaporeans. While it offers higher yields than T-bills and fixed deposits, the trade-off is that CPF funds are not easily accessible until retirement age. 

Investors should consider CPF SA as a long-term wealth accumulation tool rather than a short-term cash management solution.

Cash Management Accounts: Greater Flexibility

Cash management accounts like StashAway Simple Cash provide a competitive yield without the uncertainty of an auction. 

Benefits include greater liquidity where funds can be withdrawn anytime unlike T-bills or FDs and the given potential of higher returns depending on market conditions.

A holistic approach: Balancing safety and growth

Diversification is key to building a well-balanced portfolio. While T-bills serve as a safe investment, investors should consider spreading their funds across FDs, cash management solutions, and even higher-risk assets based on their: 

✅ Risk tolerance – Are you comfortable with potential fluctuations in return for better liquidity?

✅ Investment goals – Do you need short-term accessibility, or are you locking funds for a fixed period?

✅ Time horizon – Would you benefit from a mix of low-risk and moderate-risk assets over time?

By combining different options, you can maximise stability while maintaining liquidity and potential for better yields. 

Besides, diversification by incorporating higher-risk options like stocks and ETFs depending on their risk tolerance, investment goals, and time horizon can ensure a well-rounded approach to wealth accumulation.

Making T-bills work for you

T-bills present an opportunity for investors seeking stability, security, and competitive risk-free returns. Whether you choose competitive or non-competitive bidding, employ laddering strategies, or explore alternative low-risk investments, the key is to align your approach with your financial goals, risk tolerance, and liquidity needs.

The investment landscape is constantly evolving, and so should your strategy. Instead of chasing yields blindly, stay informed, observe market trends, and position yourself wisely. A well-balanced portfolio doesn’t rely on just one type of investment—combining T-bills with other investment options ensures both stability and flexibility.

Ultimately, financial success is about making informed, confident decisions. T-bills are just one of many tools in your investment arsenal—use them wisely, and you’ll be well on your way to building a stronger financial future.