T-bills are issued via a uniform-price auction. This means that all successful applications, whether non-competitive or competitive, will be allotted the T-bills at a uniform yield, which is the cut-off yield. The cut-off yield of the T-bills auction is the highest accepted yield of successful competitive applications submitted at the auction.

In a T-bills auction, allotment starts with the non-competitive applications, followed by the competitive applications:

Non-competitive applications are allotted first, up to 40% of the total issuance amount. If the total amount of non-competitive applications exceeds 40%, the T-bills will be allotted to non-competitive applications on a pro-rated basis. However, to ensure that the final allotments are in denominations of S$1,000, adjustments will be made by the system on a randomised basis.
The rest of the issuance amount will be awarded to competitive applications, starting from the lowest to the highest yields submitted.

Illustration

Here is a stylised example to illustrate the allotment process for T-bills, which assumes:

Total Issuance Size of T-bills	S$20,000
Total Non-competitive Applications Received	S$8,000
Total Competitive ApplicationsReceived	S$18,000

For this example, the allotment will be as follows:

The non-competitive applications will be allotted first. As the non-competitive applications of S$8,000 is within 40% of the issuance size (i.e. S$8,000), the non-competitive applications will be fully allotted. This means that everyone who submitted a non-competitive application will be allotted the amount that they had bid for, capped at S$1 million per T-bills auction.
The competitive applications will be allotted next based on the remaining auction amount of S$12,000. The applications will be allotted starting with the lowest yield, and move to the next lowest yield and so on until the remaining auction amount of S$12,000 is reached.

Competitive or Non-competitive	Application amount	Allotment amount	Cumulative allotment amount	Remarks
Non-competitive applications (A)	S$1,000	S$1,000 (fully allotted)	S$1,000
Non-competitive applications (B)	S$3,000	S$3,000 (fully allotted)	S$4,000
Non-competitive applications (C)	S$4,000	S$4,000 (fully allotted)	S$8,000
Total of Non-competitive applications	*S$8,000*	*S$8,000* (100% of non-competitive applications allotted)	*S$8,000*	In this example, the non-competitive applications were 100% allotted as the total amount of non-competitive applications was within 40% of the total issuance amount.
Competitive applications at 1%	S$3,000	S$3,000 (fully allotted)	S$11,000	All applications at this yield were fully allotted as it is below the cut-off yield.
Competitive applications at 2%	S$4,000	S$4,000 (fully allotted)	S$15,000	All applications at this yield were fully allotted as it is below the cut-off yield.
Competitive applications at 3%	S$4,000	S$4,000 (fully allotted)	S$19,000	All applications at this yield were fully allotted as it is below the cut-off yield.
Competitive applications at 4%	S$5,000	S$1,000 (pro-rated allotment)	S$20,000	Applications at 4% are pro-rated as the total issuance size has been reached. 4% becomes the cut-off yield for this auction. Approximately 20% of competitive applications at this cut-off yield were allotted.
Competitive applications at 5%	S$2,000	-	-	Applications at this yield were not allotted as the total issuance size has been met.
Total of Competitive applications	S$18,000	*S$12,000*	S$20,000	*4% becomes the cut-off yield for this auction.*
*In summary*
Total of both Non-competitive and Competitive applications	*S$26,000* (Non-competitive S$8,000, Competitive S$18,000)	S$20,000 (Non-competitive S$8,000, Competitive S$12,000)	*S$20,000*	Cut-off yield = 4%.

In this example, the cut-off yield is 4%. All allotted applications, non-competitive and competitive, will receive the same cut-off yield of 4%.

What is the cut-off yield of the latest T-bill?

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