Singapore Treasury bills (T-bills)

[stephenbishop]

This is a very informative thread especially for SGS bonds Reopen.

Thank you to @reddevil0728 for inviting comments on SGS Bonds in this thread. I think we are all learning more about these instruments as we keep discussing - at least I know I am learning as I participate in the discussion.

 

[sohguanh]

Thank you to @reddevil0728 for inviting comments on SGS Bonds in this thread. I think we are all learning more about these instruments as we keep discussing - at least I know I am learning as I participate in the discussion.

Among so many posts I read you are the one sharing how SGS bond (Reopen) works. I guess becuz you participate and know how it works. Most posts are pretty on SSB and recently this new thread T-bill which I thought is for 6,12 months until SGS bond came in and you post.

Thank you once again for your sharing.

 

[demoforce1]

Sorry I missed directly answering this question . You put in 115% and you get refunded on the same day the auction closes 115% - cut-off price (A) - accrued interest from last interest payment date to date of issuance of the reopened bond (B). The amount in (B) is effectively refunded to you at the first interest payment date after re-issuance as you receive the full amount of the coupon (not prorated to the time since your acquisition).

So effectively you end up getting refunded 115% - cut-off price (mostly on the same date as the auction closes and the accrued interest portion (B) on the date of the first coupon payment after re-issuance).

when we will get the refund? I have not see it in my DBS

 

[stephenbishop]

when we will get the refund? I have not see it in my DBS

Based on my experience with DBS, by cob today.

 

[d5dude]

Yes. I understand that FSM does not buy SGS bond. I'm wondering is the bank buying price comparable to FSM and are they buying at market price or how much is the difference in price.

Moving forward the longer tenure (5,10,20,30 years) bonds might have a good rate. Which might be worth considering buying. Hence there is a need to understand how to sell them when there is need to.

In terms of liquidity, FSM is definitely better. However there are fees involves. Is it worth getting SGS through MAS auction(to maximum yield) or through FSM for longer term tenure.

So I checked with FSM and they confirmed that there is actually a market for SGS bonds on FSM, but you have to transfer them over to FSM from CDP if you want to sell them (to FSM). You can estimate the price from the indicative bid/ask, to get the actual price you need to request for a quote, I think the price should be quite close to indicative bid/ask (from my experience with their wholesale bond quotes).

There are very few ways to buy or sell an SGS bond outside of MAS auctions and SGX, FSM does cost a little more due to the fees and spread, but imo its well worth it since you gain liquidity and the ability to buy them when prices plunge and there are no auctions of a desired tenure.

 

[demoforce1]

Based on my experience with DBS, by cob today.

thank you, will this appear in our CDP tomorrow?

 

[stephenbishop]

thank you, will this appear in our CDP tomorrow?

I think it will appear in cdp 1 day after issuance date ie on 2 July.

 

[anddrool]

So I checked with FSM and they confirmed that there is actually a market for SGS bonds on FSM, but you have to transfer them over to FSM from CDP if you want to sell them (to FSM). You can estimate the price from the indicative bid/ask, to get the actual price you need to request for a quote, I think the price should be quite close to indicative bid/ask (from my experience with their wholesale bond quotes).

There are very few ways to buy or sell an SGS bond outside of MAS auctions and SGX, FSM does cost a little more due to the fees and spread, but imo its well worth it since you gain liquidity and the ability to buy them when prices plunge and there are no auctions of a desired tenure.

Good to know that it is possible to transfer from CDP to FSM.
Yes. I agree with you that for long tenor it will be better to buy from FSM for the liquidity. The platform fee, selling/buying, management fee, is worthwhile to pay for the liquidity.
Typical fee will be: 0.1% buying + 0.1% selling + 0.025% management fee per quarter. This fee when spread across many years is actually not much.

 

[sohguanh]

So I checked with FSM and they confirmed that there is actually a market for SGS bonds on FSM, but you have to transfer them over to FSM from CDP if you want to sell them (to FSM). You can estimate the price from the indicative bid/ask, to get the actual price you need to request for a quote, I think the price should be quite close to indicative bid/ask (from my experience with their wholesale bond quotes).

There are very few ways to buy or sell an SGS bond outside of MAS auctions and SGX, FSM does cost a little more due to the fees and spread, but imo its well worth it since you gain liquidity and the ability to buy them when prices plunge and there are no auctions of a desired tenure.

This is new news to me as I am also a FSM customer. Above means to sell you transfer from CDP to them and then from FSM you sell. But sell will guarantee success or it will be depending if there are buyers? What I have checked in SGX is there are few buyers for those SGS bond so wondering FSM will face this issue or once you execute Sell, by hook or crook FSM will take and use their own resources to find a buyer to buy your SGS bond you sell? I.e you execute Sell, it is confirmed sell no need wait got buyer then is successful

 

[stephenbishop]

Based on my experience with DBS, by cob today.

I just got the balance of 15% refund into my UOB account a few minutes ago.

 

[d5dude]

This is new news to me as I am also a FSM customer. Above means to sell you transfer from CDP to them and then from FSM you sell. But sell will guarantee success or it will be depending if there are buyers? What I have checked in SGX is there are few buyers for those SGS bond so wondering FSM will face this issue or once you execute Sell, by hook or crook FSM will take and use their own resources to find a buyer to buy your SGS bond you sell? I.e you execute Sell, it is confirmed sell no need wait got buyer then is successful

Should be 100% able to sell, question is at what price. I think unless you are trying to dump millions of dollars of SGS the price should be quite close to indicative bid/ask.

 

[rayzzzz82]

Can I check how much is the refund for 2YR SGS NY09100H?

I am bidding for 30,000 units and based on the deposit of 115% for reopened SGS bonds, 34,500 SGD was deducted. I am quite clear on this however the weird part is that only 4,013.70 SGD is refunded to me and not 4,500 SGD.

Is there something wrong?

 

[a4973]

Can I check how much is the refund for 2YR SGS NY09100H?

I am bidding for 30,000 units and based on the deposit of 115% for reopened SGS bonds, 34,500 SGD was deducted. I am quite clear on this however the weird part is that only 4,013.70 SGD is refunded to me and not 4,500 SGD.

Is there something wrong?

The answer is in post #127
Post in thread 'Singapore Government Securities (SGS) Treasury bills (T-bills)' https://forums.hardwarezone.com.sg/...treasury-bills-t-bills.6769601/post-142396163

 

[reddevil0728]

I agree. From the perspective of both ease of understanding and liquidity, generally, it is only after we have exhausted our 200k SSB quota that we should consider SGS t-bills and bonds.

Agree that SSB is designed for retail investors in mind. But I would say t-bill is actually a good complementary product.

1) SSB has transaction cost while T-Bill doesn’t
2) can use SSB to lock in longer term rate for a portion of your money while use T-bill to get higher yield for shorter term (the lower 1y yield for SSB + transaction cost makes it more inferior to T-bill for the short term)
3) of course cognisant of the inferior liquidity of t-bill (transaction cost and liquidity in secondary market), but hey it’s just 6 month
4) auction available fortnightly so you can spread out your investment and create your t-bill ladder which is more reactive to interest changes
5) you get the “interest” immediately so technically your yield is slightly higher for t-bill if you use that for something else

A lot of other pros and cons for these 2 but I’ll say good complement and not too difficult to understand.

SGS bond on the other hand I agree should exhaust the above then think about this, since SSB is meant to replicate SGS bond for the retail folks

So I checked with FSM and they confirmed that there is actually a market for SGS bonds on FSM, but you have to transfer them over to FSM from CDP if you want to sell them (to FSM). You can estimate the price from the indicative bid/ask, to get the actual price you need to request for a quote, I think the price should be quite close to indicative bid/ask (from my experience with their wholesale bond quotes).

There are very few ways to buy or sell an SGS bond outside of MAS auctions and SGX, FSM does cost a little more due to the fees and spread, but imo its well worth it since you gain liquidity and the ability to buy them when prices plunge and there are no auctions of a desired tenure.

FSM can sell equity from CDP. Can’t do the same for SGS Bond and must transfer?

This is new news to me as I am also a FSM customer. Above means to sell you transfer from CDP to them and then from FSM you sell. But sell will guarantee success or it will be depending if there are buyers? What I have checked in SGX is there are few buyers for those SGS bond so wondering FSM will face this issue or once you execute Sell, by hook or crook FSM will take and use their own resources to find a buyer to buy your SGS bond you sell? I.e you execute Sell, it is confirmed sell no need wait got buyer then is successful

Pretty sure there will definitely be bidders, but might be super low bid cause it might not be that liquid.

 

[rayzzzz82]

The answer is in post #127
Post in thread 'Singapore Government Securities (SGS) Treasury bills (T-bills)' https://forums.hardwarezone.com.sg/...treasury-bills-t-bills.6769601/post-142396163

The closing price is 100.55 (https://www.mas.gov.sg/bonds-and-bi...nds?issue_code=NY09100H&issue_date=2022-07-01). So of which for 300 units of 2yr SGD, it will add up to 30,165 SGD and deducted from the initial deposit of 34,500 SGD, I should receive a refund of 4,335 SGD. However, I only received 4,013.70 SGD for refund.

Is there something wrong with the calculation. Would appreciate if someone can do the calculation of how this refund is being computed.

 

[stephenbishop]

Can I check how much is the refund for 2YR SGS NY09100H?

I am bidding for 30,000 units and based on the deposit of 115% for reopened SGS bonds, 34,500 SGD was deducted. I am quite clear on this however the weird part is that only 4,013.70 SGD is refunded to me and not 4,500 SGD.

34500 - (101.621 * 300) = 4013.70

The cut-off price of 101.621 is the "dirty" cut-off price as it includes accrued interest of approx. 1.00 (122 days interest @ 3% pa). Your "clean" cut off price is therefore 101.621 - 1.00 = 100.621

 

[reddevil0728]

The closing price is 100.55 (https://www.mas.gov.sg/bonds-and-bi...nds?issue_code=NY09100H&issue_date=2022-07-01). So of which for 300 units of 2yr SGD, it will add up to 30,165 SGD and deducted from the initial deposit of 34,500 SGD, I should receive a refund of 4,335 SGD. However, I only received 4,013.70 SGD for refund.

Is there something wrong with the calculation. Would appreciate if someone can do the calculation of how this refund is being computed.

Look under auction results

 

[rayzzzz82]

34500 - (101.621 * 300) = 4013.70

The cut-off price of 101.621 is the "dirty" cut-off price as it includes accrued interest of approx. 1.00 (122 days interest @ 3% pa). Your "clean" cut off price is therefore 101.621 - 1.00 = 100.621

Alright. thanks for the explanation.

 

[anddrool]

Agree that SSB is designed for retail investors in mind. But I would say t-bill is actually a good complementary product.

1) SSB has transaction cost while T-Bill doesn’t
2) can use SSB to lock in longer term rate for a portion of your money while use T-bill to get higher yield for shorter term (the lower 1y yield for SSB + transaction cost makes it more inferior to T-bill for the short term)
3) of course cognisant of the inferior liquidity of t-bill (transaction cost and liquidity in secondary market), but hey it’s just 6 month
4) auction available fortnightly so you can spread out your investment and create your t-bill ladder which is more reactive to interest changes
5) you get the “interest” immediately so technically your yield is slightly higher for t-bill if you use that for something else

A lot of other pros and cons for these 2 but I’ll say good complement and not too difficult to understand.

SGS bond on the other hand I agree should exhaust the above then think about this, since SSB is meant to replicate SGS bond for the retail folks



FSM can sell equity from CDP. Can’t do the same for SGS Bond and must transfer?

Pretty sure there will definitely be bidders, but might be super low bid cause it might not be that liquid.

The SGS bonds are very liquid on FSM platform. You can click on history price for the bond listed on FSM. There are transactions everyday for each listed bond.

 

[reddevil0728]

The SGS bonds are very liquid on FSM platform. You can click on history price for the bond listed on FSM. There are transactions everyday for each listed bond.

Referring to tbill

anyway is not fsm right but rather SGX. Fsm is just the broker