CUT-OFF yield on the latest tranche of six-month Singapore Treasury bills (T-bills) has risen to 3.8 per cent, according to auction results released on Thursday (Nov 23).
This is up from the cut-off yield of 3.75 per cent in the previous six-month tranche.
Demand for the T-bills slid slightly, with applications totalling S$13 billion for the S$6 billion on offer. This represents a bid-to-cover ratio of 2.17. In comparison, the previous tranche received a total of S$13.2 billion in applications for the S$5.7 billion on offer, which represents a bid-to-cover ratio of 2.31. In the latest auction, non-competitive bids totalled S$2.2 billion and were fully allotted.
Meanwhile, around 20 per cent of competitive applications at the cut-off yield were allotted. Those who specified a lower yield were fully allotted, and those who specified a higher yield were not allotted.
T-bill yields hit a 30-year high of 4.4 per cent in December 2022, but have hovered mostly around the 3.7 per cent to 3.8 per cent range since March this year.
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Choose wisely when it comes to the many options for your excess cash

Interest rates are likely to remain higher for longer, which makes it imperative for individuals to manage their cash wisely VIEW ALL In other words, our expectation is for rates to remain higher for longer. This makes it imperative for investors to manage their cash wisely &ndash we think they will be rewarded for an even longer period as we are unlikely to return to the near zero-rate environment of the 2010s.

Attractive options to park cash

Investors these days have many attractive options to park their cash, ranging from more traditional choices like government securities and FDs to newer cash management solutions.
Singapore and US T-bills are among the safest instruments, with a very low risk of default as they are rated AAA and AA+, respectively by S& P. Singapore Savings Bonds (SSBs) are equally safe and generally have lower yields than T-bills over the short term, but they can be redeemed every month depending on an investor&rsquo s liquidity needs. Overall, we see these as the benchmarks for comparison, given their attractive yields of over 3 per cent coupled with very low risks.
FDs are also a common choice for investors, and these are fairly safe options up to the SDIC&rsquo s (Singapore Deposit Insurance Corporation) insured limit of S$75,000 (S$100,000 in April 2024). However, some of the most attractive rates may come with certain conditions, including minimum deposit amounts as well as minimum tenors.
As the term &ldquo fixed deposits&rdquo suggests, investors&rsquo monies are often pseudo-locked in with penalties usually imposed upon early withdrawals. Overall, FDs are a fairly safe option with slightly higher yields over Singapore government securities, though they come with some limitations (including early withdrawal penalties) which investors should be mindful of.
An increasing number of financial institutions have also rolled out cash management solutions, which typically invest in money market and short-duration bond funds. They do not come with the backing of the government, unlike T-bills and SSBs, and are outside the SDIC&rsquo s deposit guarantee.
But a large proportion of their underlying holdings generally comprise T-bills or deposits. These solutions tend to be much more liquid than FDs, often allowing withdrawals within a few days. As a whole, we consider these cash management solutions marginally riskier than T-bills and FDs, but with the benefit of significantly higher liquidity.
Investors who wish to customise their own cash management solution can invest directly in money market and short-duration bond funds. There is no shortage of such products available on the market, and investors can mix and match the funds they like, depending on their investment profiles including risk appetite and investment horizons. Once again, such a mix-and-match solution is generally liquid, with the ability to withdraw your monies within a few days.

Which should you choose?

As with virtually any investment, the choice of products depends on an individual&rsquo s investment profile. We think that government securities (by Singapore and the US) are the safest options available, suitable for individuals with lower risk tolerance. FDs are a convenient option for the layman comfortable with the conditions attached to them, including those on early withdrawals.
Meanwhile, we think that cash management solutions are the most flexible option for investors who wish to earn decent yields while retaining the ability to withdraw their monies quickly.
The writer is a research analyst with the research and portfolio management team at FSMOne.com, the B2C division of iFast Financial. The latter is the Singapore subsidiary of iFast Corporation