Uganda’s latest Treasury Bill auction gets record subscription

The Bank of Uganda (BoU) has reported overwhelming investor appetite in the latest Treasury Bills auction held on Wednesday, September 10, 2025, signaling renewed confidence in Uganda’s debt market amid a period of rising government borrowing.

According to BoU’s press release on Thursday, bids for the three tenors—91-day, 182-day, and 364-day Treasury Bills—far exceeded the amounts on offer, reflecting strong demand from banks, institutional investors, and individuals seeking safe and high-yield investments.

The auction attracted a total of Shs. 597.1 billion in tenders against an offer of just Shs25 billion, marking one of the highest oversubscription rates this year.

91-day bills: Offered at Shs. 25 billion, but attracted bids worth Shs. 46.5 billion.

182-day bills: Oversubscribed with Shs. 86.5 billion tendered.

364-day bills: Drew the lion’s share, with an impressive Shs. 464.1 billion tendered.

Out of these, BoU accepted bids totaling Shs. 361.5 billion, mainly in the longer-tenor securities, which typically attract higher yields and appeal to investors seeking longer-term returns.

Yields Edge Up

The auction results show a steady rise in yields, partly reflecting the government’s growing need for short-term financing and investors pricing in inflation and fiscal risks.

91-day bills cleared at an effective yield of 10.38%, with an annual discount rate of 9.76%.

182-day bills offered yields above 13%.

364-day bills remained the most attractive, clearing at an effective yield of 15.25%.

These higher yields are likely to push up short-term borrowing costs for government but also provide attractive risk-free returns for investors.

Context: Debt Dynamics and Financing Needs

The auction comes just days after Finance Minister Matia Kasaija acknowledged during the National Budget Conference FY 2026/27 that Uganda’s public debt had risen to USD 32.33 billion (Shs. 116.21 trillion) by June 2025, equivalent to 51.3% of GDP. He insisted the debt remains within sustainable levels but emphasized the need to expand domestic revenue and attract investment to reduce reliance on borrowing.

The oversubscription in this latest auction underlines a paradox in Uganda’s economy: while public debt is rising, investor confidence in government securities remains robust, driven by strong demand for safe assets in a volatile global environment.

Looking Ahead

Economists note that the strong performance of T-bill auctions demonstrates the depth of Uganda’s domestic debt market, which has increasingly become a crucial financing source for infrastructure and development spending. However, the upward trend in yields could increase debt servicing costs in the coming fiscal year.

The September auction results also suggest that investors expect continued tightening of liquidity conditions and remain cautious about inflationary pressures, even as the government projects the economy to expand by 7% in FY 2025/26 and into double-digit growth once oil production begins in 2026.

For the government, balancing short-term financing needs with the long-term goal of reducing reliance on debt will be key to sustaining fiscal stability.