What You Need to Know About Treasury Bills

Last updated on October 18, 2023

Treasury bill issued by government

Whether you are an individual with aspirations of entering the world of investment, a dedicated follower of financial matters, or even an institution seeking to enhance its financial acumen, this article beckons you to embark on a voyage of discovery into the intriguing landscape of treasury bills.

This article will cover:

What are Treasury Bills and How Do They Work?

Treasury bills, more commonly known as T-Bills, are short-term Singapore Government Securities.

Fundamentally, they are government bonds issued by the Monetary Authority of Singapore (MAS) to individual investors and institutional investors. The MAS functions as Singapore’s central bank with the primary goal of promoting stable and non-inflationary economic growth. It also oversees Singapore’s financial services industry and the financial institutions within it to ensure effective functioning of the financial market.

When you buy a T-Bill, you are essentially lending money to the MAS. In return for the money lent to the government, the government agrees to pay you back the principal sum as well as your interest earnings. These interest earnings are generated from a predetermined fixed interest rate applied to the borrowed sum. Upon the maturity of your T-Bills, you will be able to redeem them to receive both your principal sum as well as interest earnings. Accordingly, this is how you, as an investor, make a profit.

Who Issues Treasury Bills in Singapore?

The Singapore government regulates and oversees the issuance of T-Bills as part of its broader monetary and fiscal policy framework. This responsibility rests with the government primarily because T-Bills play a crucial role in managing the country’s money supply, influencing interest rates, as well as ensuring stable economic conditions.

What is the Significance of Treasury Bills in Singapore?

As mechanisms to control the money supply, the issuance and redemption of T-Bills allow the government to adjust the amount of money circulating in the economy. When the government issues T-Bills, it absorbs excess funds from the market, reducing the money supply and potentially curbing inflation. Conversely, when it redeems T-Bills, it injects money into the economy, promoting economic activity.

How are Treasury Bills Different From Other Bond Types?

Apart from T-Bills, there are two other main bond types, namely the Singapore Saving Bonds (SSB) and Singapore Government Securities (SGS) Bond.

SSBs are government-backed investment products that offer varying interest rates over time whereby the longer you save, the higher your return. Conversely, SGS Bonds focus on developing markets and financing infrastructure projects. They offer a constant interest rate and span diverse maturity periods.

The most common type of bond is the SSB whereas T-Bills are the least common type of bond. A detailed comparison outlining the differences in their key features can be found in the following table:

T-Bills SSB SGS Bonds
Tenor 6 months or

1 year

Up to 10 years 2, 5, 10, 15, 20, 30 or 50 years
Frequency of issuance Fortnightly or quarterly Issued every month Auction: Monthly

Syndication: From time to time

Method of sale Uniform Price Auction Quantity Ceiling Format Auction: Uniform Price Auction

Syndication: Public Offer

Minimum investment amount S$1,000 and in multiples of S$1,000 S$500 and in multiple of S$500 S$1,000 and in multiples of S$1,000
Maximum investment amount None; Up to allotment limit S$200,000 Auction: None; Up to allotment limit

Syndication: None

Ability to invest using CPF & SRS funds Yes CPF: No

SRS: Yes

Auction: Yes

Syndication: No

Type of interest rate payment No coupon Fixed coupon Fixed coupon
Frequency of interest payments At maturity Every 6 months, starting from the month of issue Every 6 months, starting from the month of issue
Flexibility for early redemption No early redemption Early redemption in any given month before bond matures No early redemption

What are the Benefits of Treasury Bills?

Exemption from taxation

For individuals, including both Singapore residents and non-residents, there is no taxation on interest income earned from T-Bills. The only exceptions are situations where the income is derived through a partnership in Singapore or from the carrying on of a trade, business or profession.

Likewise, non-resident institutions which are institutions not based in Singapore but conduct operations within the country, including foreign-owned entities and embassies operating here, are granted a tax exemption until 31 December 2028.

However, interest income earned up to 31 December 2023 is subject to a concessionary tax rate of 10% for resident financial institutions. These refer to entities based and operating in Singapore, encompassing institutions such as hospitals and financial institutions. This specified tax rate is only inapplicable to Standard Tier companies. These Standard Tier companies are instead taxed at a concessionary rate of 12% to 13.5%.

Therefore, T-Bills typically do not involve the payment of tax.

Secure investment option

T-Bills have a credit rating of AAA. In other words, T-Bills stand as one of the most secure investment options available for you. This is attributable to Singapore’s robust creditworthiness as well as its guaranteed ability to pay investors their principal amount along with the earned interest.

Short-term investment

T-Bills stand as a compelling category within the realm of investments as characterised by their distinct trait of being short-term investments. These short-term investments, just like T-Bills, possess short maturity periods. These periods indicate the duration during which the investment must be held before it reaches maturity, at which point the principal amount is returned to the investor, along with any accrued interest.

Unlike their longer-term counterparts, T-Bills possess an inherent advantage in terms of liquidity. This advantage stems from their relatively shorter time to maturity, which makes it considerably quicker to convert the investment – an asset – into cash for other uses. This is especially beneficial in the event you need to access your funds sooner, such as when you face unexpected expenses or undergo a change in financial goals.

Predetermined interest rate

T-Bills also offer a predetermined interest rate that differs with each T-Bill auction. As such, you are provided with predictable and stable returns regardless of broader economic conditions. This makes T-Bills particularly appealing to risk-averse investors who value consistent income. Therefore, this predictability presents a clear foresight that allows you to better map out and budget your future financial plans.

Who is Eligible to Purchase Treasury Bills?

Treasury bills can be purchased by all institutions and individuals, including both residents and non-residents. However, individuals would need to be at least 18 years old.

When Can Treasury Bills be Purchased?

T-Bills are issued fortnightly or quarterly by MAS via a uniform-price auction. This means that T-Bills are bought at auctions through a bidding process. These auctions typically take place 3 business days before issuance and are announced on the MAS website 5 business days before the auction.

For further details about the exact dates of T-Bills issuance, you may refer to this issuance calendar.

How Can Treasury Bills be Purchased?

By individuals

For individuals, you can buy T-Bills using cash, Supplementary Retirement Scheme (SRS) funds or CPF Investment Scheme (CPFIS) funds.

For cash applications, you will need to have a bank account with one of Singapore’s three local banks (DBS/POSB, OCBC and UOB) as well as an individual Central Depository (CDP) account with an activated Direct Crediting Services. Thereafter, you can apply for T-Bills through your chosen local banks.

For applications using SRS funds, you will need an SRS account with one of the three SRS operators (DBS/POSB, OCBC and UOB). Thereafter, you can apply for T-Bills through your SRS operator’s online banking portal.

For applications using CPFIS funds, involving the Ordinary Account, you will need a CPF Investment Account with one of the three CPFIS agent banks (DBS/POSB, OCBC and UOB). Thereafter, you will need to submit an application in person at any CPFIS agent bank.

For applications using CPFIS funds involving the Special Account, you can invest in T-Bills without the need for a CPF Investment Account.

For further details on the process of buying a T-Bill, please click here.

By institutions 

For institutions, T-Bills can be bought at either an auction or by syndication. 

If your institution wishes to buy T-Bills at an auction, it will need to have a trading account with a primary dealer. These primary dealers are specific banks in Singapore that have been authorised by the MAS to act as market makers and dealers for SGS. Under the MAS, there are 13 approved primary dealers. These primary dealers are: 

  • Australia & New Zealand Banking Group Ltd
  • Bank of America, National Association
  • Barclays Bank PLC
  • BNP Paribas SA
  • Citibank, NA
  • Credit Suisse AG
  • DBS Bank Ltd
  • Deutsche Bank AG
  • Hongkong and Shanghai Banking Corporation Ltd
  • Malayan Banking Bhd
  • Overseas-Chinese Banking Corporation Ltd
  • Standard Chartered Bank (Singapore) Limited
  • United Overseas Bank Ltd

Thereafter, your institution will need to submit an action bid through the chosen primary dealer on or before the auction day. 

Conversely, should your institution intend to acquire T-Bills through syndication, it must reach out to the designated Bookrunner, which will be announced by MAS prior to the pricing day, for that particular syndicated offering to gather additional details. Thereafter, your institution can submit orders through the Bookrunner on pricing day.

For further details on buying a T-Bill, please click here

Example of how a purchase of T-Bills works

To grasp the mechanics of purchasing a T-Bill, let’s consider the following illustration.

Suppose the MAS announces an auction for a 1-year T-Bill. You, as an individual, decide to participate in this auction by submitting a bid to buy S$10,000 worth of T-Bills. The auction takes place, and your bid is successful. Subsequently, the MAS allocates the T-Bills to you at a predetermined interest rate of 1.5%.

If you choose to pay with cash, S$10,000 will be withdrawn from your designated bank account and you will receive your income interest of S$150 on the issuance date. Following this, you will receive your principal sum of S$10,000 on the maturity date, which is scheduled to occur one year from the commencement date.

In essence, treasury bills represent a secure, short-term investment avenue in Singapore. Their fixed interest rate, government backing, and low risk make them a stable choice, appealing to individual investors and institutions alike for diversification and prudent financial planning. Given these factors, please ensure that you are mindful of the aforementioned prerequisites and particulars prior to initiating any investment in T-Bills.

Miscellaneous Articles
  1. Getting a Driving Licence & Learner Driver Rules in Singapore
  2. The Kiasu Singaporean’s Guide to Hiring a Migrant Domestic Worker
  3. Military Law and How It Affects Every Singaporean Son
  4. Justices of the Peace in Singapore
  5. Drone Laws in Singapore (Registration, Permits, No-Fly Zones)
  6. If My Dog Bites Somebody, Will I be Liable?
  7. Raising Funds for Charity: Dos & Don’ts
  8. What is the Offence of Contempt of Court in Singapore?
  9. Right to Freedom of Speech and Expression in Singapore: Myth or Reality?
  10. Explained: Singapore's Official Secrets Act
  11. Death Procedures and All Death Expenses in Singapore
  12. Adopting a Dog in Singapore: 4 Guidelines to Follow
  13. What is Haj and How to Register for Haj in Singapore
  14. Parents' Guide to National Service Liability in Singapore
  15. Is It Legal to Offer or Accept a Finder’s Fee in Singapore?
  16. How is the Constitution Amended in Singapore?
  17. Here's How You Can Sell Your Insurance Policy in Singapore
  18. What to Do If Someone Steals Your Car in Singapore
  19. What You Need to Know About Treasury Bills
  20. Singapore Citizenship: How to Obtain & Can It Be Renounced?
  21. Egg Freezing Laws in Singapore: What You Need to Know
  22. Pet Adoption in Singapore: Legal Considerations & Procedure
  23. Guide to Singapore’s Maintenance of Religious Harmony Act
  24. Stay of Execution in Singapore: When is It Granted?
  25. Finfluencers in Singapore: Legal or Not?
  26. National Service (NS) Reservist in Singapore: What to Know
  27. Telemedicine in Singapore: Doctor’s Duties and Protecting Patients
  28. Renouncing Islam in Singapore: Procedure and Implications
  29. Transgender Laws and Rights in Singapore
  30. Holding a Coroner's Inquiry for Deaths in Singapore
  31. Sexual Sterilisation Rights in Singapore
  32. Commercial Vehicle: A Legal Guide to Buying One in Singapore
  33. Guide Dogs in Singapore: What You Need To Know
  34. 4 Life Milestones Where You Might Need a Lawyer