T-bills FAQs (2024)

Find out what are the frequently asked questions about buying and redeeming Treasury bills (T-bills) or learn more about the key product information for individuals.

Applying for T-bills

What is the difference between non-competitive and competitive applications?

Non-competitive Application

In anon-competitive application, you only specify the amount you want to invest and not the yield. You may wish to choose this option if you wish to invest in the bond regardless of the return or are unsure of what yield to bid.
Do note that in an auction, non-competitive applications will be allotted first, up to 40% of the total issuance amount. If the amount of non-competitive applications exceeds 40%, the T-bills will be allotted to you on a pro-rated basis.
You will get the T-bills at the cut-off yield, which is the highest accepted yield of successful competitive applications.

Note: Submitting multiple non-competitive applications does not increase the chance of successful allotment. Allotment takes into account the aggregate total amount applied by each investor, and not the number of applications submitted by each investor.

Competitive Application

If you wish to invest in the T-bills only if it yields above a certain level, you can submit a competitive application.
In the application, you can specify the minimum yield you are willing to accept in percentage terms, up to 2 decimal places. Please be mindful not to submit in price terms.
Please notethat you may not get the full amount that you applied for, depending on how your application compares to the cut-off yield.

Note: A lower yield represents a more competitive application, as you are indicating that you will accept a lower interest rate. You can submit multiple competitive applications.

How are the T-bills allotted and how are the yields of the T-bills allotted to me determined?

T-bills are issued via a uniform-price auction. This means that all successful applications, whether non-competitive or competitive, will be allotted the T-bills at a uniform yield, which is the cut-off yield. The cut-off yield of the T-bills auction is the highest accepted yield of successful competitive applications submitted at the auction.

In a T-bills auction, allotment starts with the non-competitive applications, followed by the competitive applications:

Non-competitive applications are allotted first, up to 40% of the total issuance amount. If the total amount of non-competitive applications exceeds 40%, the T-bills will be allotted to non-competitive applications on a pro-rated basis. However, to ensure that the final allotments are in denominations of S$1,000, adjustments will be made by the system on a randomised basis.
The rest of the issuance amount will be awarded to competitive applications, starting from the lowest to the highest yields submitted.

Illustration

Here is a stylised example to illustrate the allotment process for T-bills, which assumes:

Total Issuance Size of T-bills	S$20,000
Total Non-competitive Applications Received	S$8,000
Total Competitive ApplicationsReceived	S$18,000

For this example, the allotment will be as follows:

The non-competitive applications will be allotted first. As the non-competitive applications of S$8,000 is within 40% of the issuance size (i.e. S$8,000), the non-competitive applications will be fully allotted. This means that everyone who submitted a non-competitive application will be allotted the amount that they had bid for, capped at S$1 million per T-bills auction.
The competitive applications will be allotted next based on the remaining auction amount of S$12,000. The applications will be allotted starting with the lowest yield, and move to the next lowest yield and so on until the remaining auction amount of S$12,000 is reached.

Competitive or Non-competitive	Application amount	Allotment amount	Cumulative allotment amount	Remarks
Non-competitive applications (A)	S$1,000	S$1,000 (fully allotted)	S$1,000
Non-competitive applications (B)	S$3,000	S$3,000 (fully allotted)	S$4,000
Non-competitive applications (C)	S$4,000	S$4,000 (fully allotted)	S$8,000
Total of Non-competitive applications	*S$8,000*	*S$8,000* (100% of non-competitive applications allotted)	*S$8,000*	In this example, the non-competitive applications were 100% allotted as the total amount of non-competitive applications was within 40% of the total issuance amount.
Competitive applications at 1%	S$3,000	S$3,000 (fully allotted)	S$11,000	All applications at this yield were fully allotted as it is below the cut-off yield.
Competitive applications at 2%	S$4,000	S$4,000 (fully allotted)	S$15,000	All applications at this yield were fully allotted as it is below the cut-off yield.
Competitive applications at 3%	S$4,000	S$4,000 (fully allotted)	S$19,000	All applications at this yield were fully allotted as it is below the cut-off yield.
Competitive applications at 4%	S$5,000	S$1,000 (pro-rated allotment)	S$20,000	Applications at 4% are pro-rated as the total issuance size has been reached. 4% becomes the cut-off yield for this auction. Approximately 20% of competitive applications at this cut-off yield were allotted.
Competitive applications at 5%	S$2,000	-	-	Applications at this yield were not allotted as the total issuance size has been met.
Total of *Competitive* applications	S$18,000	*S$12,000*	S$20,000	*4% becomes the cut-off yield for this auction.*
*In summary*
Total of both Non-competitive and Competitive applications	*S$26,000* (Non-competitive S$8,000, Competitive S$18,000)	S$20,000 (Non-competitive S$8,000, Competitive S$12,000)	*S$20,000*	Cut-off yield = 4%.

In this example, the cut-off yield is 4%. All allotted applications, non-competitive and competitive, will receive the same cut-off yield of 4%.

What is the maximum amount of T-bills that I can apply for as an individual investor?

The sum of the competitive and non-competitive applications that may be allotted to an individual is capped at 15% of the issuance size of the T-bills auction.

In addition, the maximum allotment for non-competitive applications per individual is S$1 million per T-bills auction.

Why are there no coupon payments for my T-bills?

There are no coupon payments for T-bills.

Instead, T-bills are issued at a discount to the face (par) value. Face/par value refers to S$100 in principal amount of the T-bills applied for. The discount rate of the T-bills is the cut-off yield at the auction. The interest is paid at maturity and is the difference between the purchase price and the face value.

How and Where can I check my T-bills holdings?

For individual investors, if your application for the T-bills was successful, the T-bills holding will be reflected in your respective accounts after the issuance date.

For cash applications: You can check your CDP notification statement via CDP Internet after 6pm on issuance date. If you have opted for paper statements from CDP, the statements are typically mailed to investors from the4^th business day of each month. Please note that every 10 units on the CDP statement represents S$1,000 in face value of your T-bills holdings. For questions on your CDP account or CDP statement, please contact CDP at 6535 7511.
For SRS applications: You can check the statements from your SRS Operator (DBS/POSB, OCBC and UOB are SRS operators).
For CPFIS-OA applications: You can check the CPFIS statement sent by your agent bank (DBS/POSB, OCBC and UOB are CPFIS agent banks).
For CPFIS-SA applications: You can check your CPF statement.

How do I compute my initial investment amount for my T-bills based on the cut-off yield?

T-bills are issued at a discount to the face value.

The cut-off yield at an auction determines the cut-off price of the T-bills, based on the formula below:
D = M/365 X R
P = S$100 – D

Where:
D = full discount per S$100 face value
M = days to maturity
R = annual rate of discount (yield), expressed as %
P = dollar price per S$100 face value

For example, if the cut-off yield for a 6-month T-bills with 182 days to maturity is 4.00%, this translates to a cut-off price of S$98.005 (rounded to 3 decimal places) per S$100 in face value. This means that for every S$1,000 of T-bills that was allotted to you, your initial investment amount would be S$980.05.

When will the funds be debited from my account?

For cash applications, funds will be deducted at the point of application. The discount to the face value of your allotted T-bills will be credited into your account within 1 – 3 business days after auction date.

For SRS applications, funds will be earmarked at the point of application, for subsequent deduction within 1 – 3 business days after auction date.

For CPFIS applications, funds will be deducted within 1 – 3 business days after auction date.

Note: Please check with your bank on the relevant transaction charges (if applicable) for using the different funds for application.

Why is the amount of refund I received different from what I had calculated based on the auction results?

This can happen if there is an over-subscription for non-competitive applications (i.e. the total amount of non-competitive applications exceeds 40% of the issuance size). In this situation, the allotment to non-competitive applications will be pro-rated, with individual allotments adjusted on a randomised basis such that allotments are in denomination of S$1,000.

This may also happen if you have made a competitive application at the cut-off yield.

Illustration
Suppose a T-bills auction receives a total of S$15,000 in non-competitive applications for a total issuance size of S$30,000.

As the non-competitive applications of S$15,000 exceeds 40% of the issuance size (i.e. S$12,000), the allotment to non-competitive applications will be pro-rated by approximately 80% (S$12,000/S$15,000). This means that everyone who submitted a non-competitive application will have their allotments pro-rated and adjusted on a randomised basis to ensure that allotments are in denomination of S$1,000.

Competitive or Non-competitive	Application amount	Allotment amount	Cumulative allotment amount
Non-competitive application (A)	S$1,000	S$0 (not allotted)	S$0
Non-competitive application (B)	S$2,000	S$1,000 (partially allotted)	S$1,000
Non-competitive application (C)	S$3,000	S$3,000 (fully allotted)	S$4,000
Non-competitive application (D)	S$4,000	S$4,000 (fully allotted)	S$8,000
Non-competitive application (D)	S$5,000	S$4,000 (partially allotted)	S$12,000
Total of Non-competitive applications	*S$15,000*	*S$12,000* (Approximately 80% of non-competitive applications allotted)	Applications are pro-rated by approximately 80%, with individual allotments adjusted on randomised basis to ensure that allotments are in denominations of S$1,000.

When my application is pro-rated, what would I expect to see in terms of deduction?

For cash applications:You will receive a combined refund on the (i) non-allotted amount, and (ii) discount on the face value of T-bills which you have been allotted.

Using a 6-month T-bills with a cut-off yield of 4.00% and cut-off price of S$98.005 (rounded to 3 decimal places) per S$100 in face value as an example. If you have submitted a non-competitive application of S$2,000, and was only allotted S$1,000, you will receive a combined refund of (i) S$1,000 of your non-allotted amount, and (ii) discount on the face value of T-bills, which would be S$19.95.

Note: The discount rate of the T-bills is the cut-off yield at the auction.

For CPFIS and SRS applications: Only the settlement amount (allotted amount net of the discount) will be deducted from your respective accounts.

Using the same example above, if you submitted a non-competitive application of S$2,000 and was only allotted S$1,000, only the settlement amount of S$980.05 will be deducted from your account.

Why was my application unsuccessful?

There are a few possible reasons why your application was unsuccessful. Some common reasons include:

Joint CDP accounts cannot be used to buy T-bills. You will need to have an individual CDP Securities account as a holding account to deposit your allotted T-bills.
Invalid or incorrect CDP account number entered during the application.
The CDP account used does not have Direct Crediting Service activated.

In addition, please note that there is an allotment limit of S$1 million per individual per T-bills auction for non-competitive applications.

You may wish to check with your bank for the exact reason(s) why your application was rejected.

Upon maturity of the T-bills, when will I receive the principal amount?

On maturity, the principal amount will be credited to your respective account by the end of the day, typically after 6pm.

For cash applications: The principal amount will be credited to your designated Direct Crediting Service bank account.
For SRS applications: The principal amount will be credited to your SRS account.
For CPFIS-OA applications: The principal amount will be credited to your CPF Investment Account.
For CPFIS-SA applications: The principal amount will be credited to your CPF SA account.

Please note that should the maturity date fall on a day when MAS’ electronic payment system is not in operation, the transaction will take place on the next business day.

Others

Can I redeem T-bills before maturity?

No, you are not able to redeem your T-bills prior to maturity.

However, you can sell your T-bills in the secondary market through DBS, OCBC or UOB by visiting their branches. You should indicate whether you are using cash, SRS or CPFIS funds. Please note that prices in the secondary market may change day-to-day according to market conditions, and may be higher or lower than what you had paid for.

How do I read the T-bills auction results?

In a uniform-price auction, successful non-competitive and competitive applications will be allotted the T-bills at the Cut-off Yield and Cut-off Price. The Cut-off Yield refers to the highest accepted yield of successful competitive applications, and the Cut-off Price refers to the price corresponding to the Cut-off Yield.See question on "How do I compute my initial investment amount for my T-bills based on the cut-off yield?"for the formula to compute the cut-off price.

If you have placed a non-competitive application, you may refer to the % of Non-Competitive Applications Allotted for the percentage of allotment given to non-competitive applications for the auction. If you have placed a competitive application at the Cut-off Yield, you may refer to the % of Competitive Applications at Cut-off Allotted for the percentage of allotment given to applicants who bid exactly at the cut-off yield for the auction.

Do note that in the event of over-subscription, individual allotments will be adjusted on a randomised basis to ensure that allotments are in denomination of S$1,000.

For more information on the competitive bidding behaviour in an auction, you may also refer to the Median Yield and Average Yield. The Median Yield refers to the yield corresponding to the median of successful competitive applications, while the Average Yield refers to the sum product of the amount of successful competitive applications and the respective application yields, divided by the total amount of successful competitive applications. The results for each T-bills issue may differ depending on investors’ bidding behaviour.

FAQs

Is there a downside to T-bills? ›

T-bills pay a fixed rate of interest, which can provide a stable income. However, if interest rates rise, existing T-bills fall out of favor since their return is less than the market. T-bills have interest rate risk, which means there is a risk that existing bondholders might lose out on higher rates in the future.

View Details ›

How do T-bills work for dummies? ›

How do Treasury bills work? True T-bills generally do not make interest payments (called “coupon payments” in bond parlance). Instead, you buy them at a discount. In a hypothetical example, you might pay $950 today for a T-bill that will mature at $1,000, netting you a risk-free profit of $50.

Is laddering T-bills a good idea? ›

Bond and Treasury bill ladders are typically regarded as low-risk investment techniques, but investors should be aware of certain potential risks. Interest rate risk is one of the main risks connected to Treasury securities. Treasury securities' market value can change inversely with changes in interest rates.

Get More Info ›

Does TreasuryDirect provide statements? ›

The Account Statements will be available on the 1st business day of the month no later than 1pm Eastern Time.

Is it possible to lose money on T-bills? ›

There is virtually zero risk that you will lose principal by investing in T-bonds.

Read The Full Story ›

How much does a $1000 T-bill cost? ›

To calculate the price, take 180 days and multiply by 1.5 to get 270. Then, divide by 360 to get 0.75, and subtract 100 minus 0.75. The answer is 99.25. Because you're buying a $1,000 Treasury bill instead of one for $100, multiply 99.25 by 10 to get the final price of $992.50.

Get More Info ›

What happens when T-bill matures? ›

Upon maturity of the T-bills, when will I receive the principal amount? On maturity, the principal amount will be credited to your respective account by the end of the day, typically after 6pm. For cash applications: The principal amount will be credited to your designated Direct Crediting Service bank account.

Keep Reading ›

Do you pay taxes on T-bills? ›

Key Takeaways

Interest from Treasury bills (T-bills) is subject to federal income taxes but not state or local taxes. The interest income received in a year is recorded on Form 1099-INT. Investors can opt to have up to 50% of their Treasury bills' interest earnings automatically withheld.

Discover More ›

Can you pull money out of T-bills? ›

You can sell a T-Bill before its maturity date without penalty, although you will be charged a commission. (With CDs, you pay a sizeable penalty for early withdrawals.)

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Are T-bills safe if the market crashes? ›

Treasury securities

They are backed by the full faith and credit of the U.S. government, making them the safest of all bond types.

Find Out More ›

How to layer T-bills? ›

To build a Treasury bill ladder, buy T-bills with different maturity dates. Once the T-bills with the shortest timeline mature, roll it over into a longer maturity term. The idea of reinvestment is that you earn money via compounding interest.

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Do banks charge to buy T-bills? ›

When you buy T-bills through your bank, it may charge you additional fees and expenses such as sales commissions or transaction charges. These extra costs can add up over time and eat into your returns on your investment.

Learn More ›

What are the disadvantages of TreasuryDirect? ›

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

See Details ›

What is the 45 day rule for TreasuryDirect? ›

Customer service personnel will perform the transfer when the form is received and approved. You'll receive an e-mail confirming that activity has occurred in your account. TreasuryDirect requires Treasury Marketable Securities be held for 45 days following original issue before they may be externally transferred.

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Will TreasuryDirect send me a 1099? ›

Legacy Treasury Direct: Getting your IRS Form 1099

If you still have securities in Legacy Treasury Direct, we mail you a 1099 at the beginning of each year. If you need a duplicate 1099-INT form for the current tax year, call 844-284-2676 (free call) or, from outside the United States, +1-304-480-6464.

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Which is better, a CD or a Treasury bill? ›

Choosing between a CD and Treasuries depends on how long of a term you want. For terms of one to six months, as well as 10 years, rates are close enough that Treasuries are the better pick. For terms of one to five years, CDs are currently paying more, and it's a large enough difference to give them the edge.

Read On ›

Do you need to pay taxes on T-bills? ›

Key Takeaways

Interest from Treasury bills (T-bills) is subject to federal income taxes but not state or local taxes.

How much will I make on a 4 week Treasury bill? ›

4 Week Treasury Bill Rate is at 5.28%, compared to 5.28% the previous market day and 4.32% last year. This is higher than the long term average of 1.41%. The 4 Week Treasury Bill Rate is the yield received for investing in a US government issued treasury bill that has a maturity of 4 weeks.