Dear readers, what will be the cut-off yield for the BS23101S Singapore T-Bill (6-month Treasury Bill)?
While the cut-off yield result will be known only after the auction date of 18 Jan 2023, it is believed that the cut-off yield will be lower than the previous tranche of T-Bill given that cut-off yield of T-bill in recent tranches has been coming down (from 4.4% for 13 Dec 22 issue, to 4.28% for 27 Dec 22, then to 4.2% for 10 Jan 23 issue).
Will this be the case? Let us infer something valuable from the trend of the 6-month Singapore Treasury Bill (T-bill) and the 3-month moving averages as shown in the graph below.
Based on the above graph, the 3-month moving average is still on the uptrend. However, it is noteworthy to note that the most recent 6-month T-bill cut off yield (4.2%) has fallen below the 3-month moving average of 4.29%. Thus, I would say that the cut-off yield for the BS23101S Singapore T-Bill (6-month Treasury Bill) should be lower than 4.29% (current 3-month moving average).
Given that the reduction of the most two recent tranches of 6-month T-bill from previous tranche is -2.73% and -1.87% (or average -2.3%), applying a discount of 2.3% from 4.2% (cut-off yield) of most recent 6-month T-Bill, my estimate of T-BILL BS23101S works out to 4.10% for cut-off yield.
An estimated 4.1% is still pretty decent than the current slew of fixed deposit rates, e.g. the average 10-year yields of the February 2023 Singapore Savings Bonds is at 2.97% and hence should still attract interest even though it will be below the highest-to-date 4.4% cut-off yield for the 6-month T-Bill issued on 13 Dec 22.
Update: The Cut-off yield announced was at 4%
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