T-bills are issued at a discount to the face value.

The cut-off yield at an auction sets the cut-off price of T-bills, based on the formula below.

Formula:

• D = M/365 X R
• P = S$100 – D

Where:

• D = full discount per S$100 face value
• M = days to maturity
• R = annual rate of discount (yield), expressed as %
• P = dollar price per S$100 face value

Example:

If the cut-off yield for a 6-month T-bills with 182 days to maturity is 4.00%, this translates to a cut-off price of S$98.005 (rounded to 3 decimal places) per S$100 in face value. This means that for every S$1,000 of T-bills that was allotted to you, your initial investment amount would be S$980.05.