What is the difference between SSBs, T-bills, and SGS bonds in Singapore?

SSBs, T-bills, and SGS Bonds: A Comparison

These three instruments are government securities available in Singapore, primarily used for savings, investment, and managing liquidity, though they differ significantly in tenure and purpose.

Treasury Bills (T-bills)

T-bills are short-term Singapore Government Securities (SGS) with maturities of one year or less. They are sold at a discount to their face value, and the return is the difference between the purchase price and the face value received at maturity. The auction system involves non-competitive bids (40% allocation, pro-rated if oversubscribed) and competitive bids (60% allocation, ranked by yield). For example, the latest cut-off yield was 3.7%. T-bills are often used for short-term parking of funds.

Singapore Government Securities (SGS) Bonds

SGS bonds are medium to long-term debt instruments issued by the government, typically with maturities ranging from 2 to 10 years. Unlike T-bills, SGS bonds pay a fixed coupon interest rate semi-annually. They are generally considered a safe investment, similar to T-bills, but offer predictable income streams over a longer duration. (Note: Specific details on SGS bond yields or auction mechanics are not provided in the source material, but their role as longer-term fixed-income instruments is implied in contrast to T-bills.)

CPF vs. Investment Vehicles

It is important to distinguish these from CPF accounts. While CPF funds (like OA at 2.5% or RA at 4%) offer guaranteed interest rates, T-bills and SGS bonds are market-based instruments. For example, the Supplementary Retirement Scheme (SRS), which allows investment outside CPF, earns only 0.05% interest if left uninvested, necessitating investment in instruments like T-bills or SGS bonds to achieve better returns. The total tax relief cap for contributions to SRS (and other reliefs) is S$80,000 (IRAS). T-bills and SGS returns are generally subject to tax, unlike CPF interest.