As 2026 begins, many Singapore investors are observing a familiar shift in the market landscape. The elevated yields that were once readily available across traditional cash instruments have gradually normalised, reflecting changes in the interest rate environment.
In practice, most idle cash continues to follow a predictable and disciplined path. It is commonly parked in instruments that prioritise capital preservation and liquidity, such as Singapore T-Bills, fixed deposits, or savings accounts. These options remain popular for good reason. They are simple, familiar, and designed to minimise volatility, making them a natural choice to allocate cash towards.
For investors with Singapore T-Bills or fixed deposits reaching maturity, however, this shift in rates can feel especially noticeable. Reinvestment rates today are typically closer to 1.5 percent per annum, offering stability and predictability, but at a level that may feel modest compared to previous years.
A short-term option most investors overlook
The challenge of managing short-term cash is not unique to individual investors. Large institutions such as insurers, asset managers, and corporates face similar considerations - they need to deploy cash efficiently over short periods without committing long tenures or leaving funds unutilised.
One solution they commonly use is commercial paper (CP).
Commercial paper is a short-term debt instrument issued by companies to fund working capital and operational needs. It typically offers a fixed return over a defined period, with principal repaid at maturity, subject to the credit profile of the issuing company. In short, commercial paper typically means:
- Short tenures, often between 3 - 12 months
- Fixed income payouts determined upfront
- Principal repayment at maturity, subject to issuer credit risk
Historically, the commercial paper market was only accessible to institutional investors with minimum entry requirements of US$100,000 or more. ADDX uses technology to make these institutional-grade assets accessible at S$20,000, allowing individual investors to capture yields that were previously out of reach.
How do commercial papers compare with other short-term options?
Here’s a side-by-side comparison:
| Asset class | Commercial Paper | Singapore T-Bills2 |
Bank FD3 | SSB4 | Money Market Fund |
|---|---|---|---|---|---|
| Term | 3 - 12 months (varies by issuer) |
6 months or 1 year | 1 - 36 months (varies by bank) |
Up to 10 years | No lock-in period |
| Est. annualised return |
Historically offering higher yields than bank deposits and other traditional
short-term instruments in return for being subject to issuer credit risk
View example of past offerings, for reference only |
~1.4% (latest auctions; subject to change) | ~0.5% - 2.0% (often promotional) | ~2.0% average over 10 years | ~1.79% - 2.57% (depending on fund and market conditions)5 |
| Return structured | Fixed return determined at subscription | Fixed at auction | Fixed if held to maturity | Step-up, averaged over holding period | Variable, NAV-based |
| Liquidity | Typically held to maturity | Typically held to maturity | Early withdrawal may have penalty | Redeemable monthly with conditions | Redemption terms subject to fund structure |
| Risk | Reliant on issuer’s creditworthiness | Credit risk is lower as it is backed by Singapore Government | Exposed to underlying bank credit risk and deposit limits | Credit risk is lower as it is backed by Singapore Government | Credit risk of the fund manager as well as market risk influenced by underlying portfolio and market trends |
| Min. investment | SGD 20,000 | SGD 1,000 | Varies | SGD 500 | SGD 1,000 |
| Max. investment | Varies by issuer | None; up to allotment limit for auctions | None | SGD 200,000 overall | None |
| Redemption | At maturity | At maturity | Anytime | Anytime | Anytime |
| Withdrawal penalty | No early redemption | No early redemption | Potential forfeiture of accrued interest | Loss of future step-up interest (opportunity cost) | No |
| Capital guaranteed | No, subject to issuer credit risk | Yes | Yes (subject to SDIC limits) | Yes | No |
Data as of 8 January, 2026
Risks associated with commercial papers
When considering commercial paper alongside other short-term instruments such as Singapore T-Bills, it is important to understand how the underlying risks differ.
Singapore T-Bills are issued by the Singapore Government and are backed by its credit standing. Returns are determined through auction, and principal is repaid at maturity.
Commercial paper, by contrast, is issued by corporates. As a result, returns and repayment are dependent on the credit profile and financial position of the issuing company. While commercial paper typically offers fixed terms over short durations, it carries issuer-specific credit risk, which differs in nature from government-issued instruments.
Understanding these distinctions helps investors assess how different short-term instruments function, and the trade-offs involved between issuer type, credit exposure, and return structure.
How ADDX approaches commercial papers?
On ADDX, our commercial paper issuers go through three factors of review before any offering is made available to investors:
- Issuer quality: Priority is given to issuers that are SGX-listed, established blue-chip companies, or reputable mid-cap firms with demonstrable operating history and stable business fundamentals.
- Credit assessment: Each issuer undergoes a detailed review by the investment team, including analysis of audited financial statements, cash flow visibility, balance sheet strength, and historical debt servicing behaviour.
- As a platform operating under a regulatory framework in Singapore, ADDX applies defined listing criteria and internal governance requirements to issuers before they are made available on the platform. These standards are designed to assess issuer eligibility, disclosure quality, and risk considerations, and to ensure that offerings are structured in accordance with applicable regulatory obligations and ADDX’s platform requirements.
Explore current short-term opportunities today
Don't let your cash lose its purchasing power to inflation. As traditional rates cool, short-term debt instruments like commercial paper offer a sophisticated alternative for the proactive investor.
Register on ADDX today to browse our latest commercial paper opportunities and start earning a higher yield on your idle cash.
References:
1Singapore core inflation at 1.2% y/y in October, higher than expected | Reuters
3Singapore Best Fixed Deposit Rates [January 2026] | StashAway Singapore
5The Complete Guide to Money Market Funds in Singapore: A 2026 Guide | StashAway Singapore
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