Treasury bills and short-term government securities bonds – the next low-risk investment option?

Treasury bills and short-term government securities bonds – the next low-risk investment option?


With their relatively higher yields, T-bills and short-term SGS bonds are worth considering for investors aiming to generate returns amid volatile market problems, financial advisers told CNA.

Completely backed by the Federal government, they are also generally regarded safe investments.

It is also likely that investors will get the particular amounts they make an application for, unlike the Singapore Savings Bonds that have seen smaller end sizes amid red-hot demand,   stated PhillipCapital’s associate finance manager Elijah Shelter.

The Singapore Savings Bonds have a limit of S$200, 000 per investor across different tranches, but for the August issue, the quantity ceiling – applied when applications exceed the issuance size – was S$9, 000.  

Traders can put in as much as S$1 million for every T-bill application and S$2 million for each SGS bond program. Retail investors typically get the amount they apply for, said Mr Lee.

In addition , there are no penalties for liquidating your T-bill or SGS bond before maturation, said Mr Tan, although he informed that doing so with a sale in the secondary market might take the risk of capital losses.

T-bills and SGS bonds are tradable financial debt securities, meaning they could be bought or sold on the Singapore Trade, but their prices are usually highly sensitive in order to interest rate movements. In general, bond prices plus interest rates move in opposite directions so if interest rates rise, bond prices will fall and vice versa.

Apart from market danger, liquidity could be an problem if there are couple of interested buyers.

“The bond marketplace is not like the stock exchange … so it can be extremely hard to find a taker, ” said Mr Lee. “You may have to offer a drastic, fire-sale kind of price … but it is not likely that you are willing to get rid of that much so you will probably just hold on to this. ”

This individual added: “Six months (for a T-bill) may seem like a limited time, but it can think that an eternity if you’re caught in a sticky situation. ”

Plus upon maturity, Mr Lee, who specialises in retirement techniques, said investors will have to start shopping around regarding investment options and face the possibility of interest rate risk.

Using the example of a six-month T-bill, he stated: “The rates are actually very attractive yet after six months, what is next?  

“You will have to contend with the fact that every time a person renew, you are hoping that the rates are still good. ”