What happens to my T-bill if I want to exit before maturity?

Exiting T-bills Before Maturity

Treasury Bills (T-bills) are short-term Singapore Government Securities (SGS) issued by the Monetary Authority of Singapore (MAS) on behalf of the Government. Unlike fixed deposits or CPF funds, T-bills are tradable instruments on the secondary market.

Secondary Market Trading

If you wish to exit your T-bill investment before its maturity date, you must sell it on the secondary market. You cannot simply redeem it directly with the Government or MAS.

• Selling Mechanism: T-bills are traded over-the-counter (OTC) through participating banks or financial institutions that act as SGS dealers. You will need to contact your broker or bank where you purchased the T-bill to initiate the sale.
• Price Fluctuation: The price you receive upon selling is determined by prevailing market interest rates at the time of sale. If market interest rates have risen since you bought your T-bill, the market price of your existing lower-yielding T-bill will likely be lower than what you paid (selling at a discount to par value). Conversely, if market rates have fallen, you might sell at a premium.
• Yield Calculation: Your final realized yield will depend on the difference between your purchase price and the selling price, factoring in the time held. This realized yield may be higher or lower than the yield you locked in at the initial auction.

No Direct Redemption or Penalty

There is no direct mechanism provided by MAS or IRAS to exit a T-bill before maturity without selling it on the secondary market. Furthermore, unlike some investment products, there is no fixed penalty imposed by the Government for early exit; the impact is purely market-driven based on the prevailing secondary market price.

Comparison to CPF

This tradability contrasts sharply with CPF funds. For example, funds transferred from your CPF Ordinary Account (OA) to your Special Account (SA) or Retirement Account (RA) are permanent, one-way transfers (e.g., OA to RA earns 4% but is locked for monthly payouts from age 65). T-bills offer liquidity through the secondary market, albeit at a potentially fluctuating price, whereas CPF funds are locked in by regulation.