What are T - Bills & SSB?
Typically bonds and other debt instruments bear credit risks of the issuer. However, Treasury bills ("T-bills") and Singapore Savings Bonds ("SSB") have the backing of the Singapore government and have AAA credit rating. This makes them good low risk investments with relatively decent liquidity.
Investors can apply to purchase T-bills and other bonds through DBS/POSB, OCBC and UOB ATMs or internet banking. UOB still accepts application over the counter.
Information on auction and issue dates of T- bills can be found on https://www.mas.gov.sg/bonds-and-bills/auctions-and-issuance-calendar
Singapore Treasury Bills
T- bills are short duration instruments of between 6 or12 months. T-bills can be purchased in denominations of $1,000. The last 6 month T-bill auctioned on 2 Feb 2023 had a yield of 3.88% pa. As T- bills are issued at a discount, the interest is only paid on maturity as the face value of the T-bill will be paid to the holder. T-bills cannot be redeemed before maturity.
Singapore Savings Bonds
These are longer term instruments with maturity periods of 10 years and can be purchased in denomination of $500 up to a maximum of $200,000. However, the interest rate on SSBs is typically lower than for other Singapore bonds.
However, you can redeem these bonds (at any time within fixed windows) without penalty. Principal and accrued interest will be paid to you by the second business day of the next month.
Application for redemption of SSB can be made each month between the announcement date and application closing date of the new Savings bond. Redemptions will take place on the issuance date of the new Savings Bond issue. The Savings Bonds will be redeemed at face value plus accrued interest.
What are SGS Bonds?
Singapore Government Securities ("SGS") Bonds are debt securities issued by the Singapore government. Typically SGS Bond have maturity periods of 2, 5, 10, 15, 20 and 30 years. T-Bills and SSB are a special category of SGS Bonds.
Both SGS Bonds and T - Bills are tradeable. However, the market value of the bonds at any point in time before maturity will vary depending on the prevailing interest rate versus the coupon rate. Typically if prevailing interest rate is higher than the coupon rate, the market value of the bond will be lower than the face value of the bond. However, you will receive the face value of the bond if held to maturity.
| T - Bills | Sg Savings Bonds | SGS Bonds | |
|---|---|---|---|
| Coupon Rate (pa) * | - | 2.84% (steps up ea yr after 6th yr) | 2.625% (10 years) |
| Closing Yield (pa) | 3.91% | - | 3.15% |
| Maturity | 6 / 12 months | 10 years | 2/ 5/ 10/ 15/ 20/ 30 years |
| Tradeable on Secondary Market | Yes | No | Yes |
| Redeemable | No | Yes | No |
| Investment Denomination/ Limits | $1,000 (Auction Limits) | $500 (up to $200,000) | $1,000 (Auction Limits) |
| Interest Payment | Face Value on Maturity | 6 monthly | 6 monthly |
| Use CPF or SRS | SRS | Yes | Yes |
Source: MAS website
Information is correct as of 15 Feb 2023. Information may change from time to time. Interest rates may change from Issue Date to Issue Date.
Which Bond is right for you?
There is no right or wrong product. What is right for you would be dependent on your investment horizon and risk appetite. Singapore government bonds are considered low risk investments but the yields are relatively low compared to the possible returns from equities which are higher risk assets.