Bank of Uganda to auction Shs355 billion in Treasury Bills as yields edge higher

KAMPALA — The Bank of Uganda (BoU) has announced the sale of government securities worth Shs355 billion in its latest Treasury Bills auction, scheduled for September 24, 2025. The offering includes Shs25 billion in 91-day bills, Shs75 billion in 182-day bills, and Shs255 billion in 364-day paperBOU.

The move comes amid a tightening interest rate environment, where recent auctions have seen yields on government debt instruments edge upward, reflecting both liquidity conditions in the banking sector and investors’ inflation expectations.

At the last T-bill auction in early September, cut-off yields for one-year bills hovered above the 14 percent mark, while shorter-term maturities also registered slight increases compared to August. Analysts attribute the trend to the central bank’s cautious stance on inflation, which, although moderating, remains above its medium-term target.

BoU’s latest notice emphasizes that only Primary Dealer banks — including Stanbic, Standard Chartered, Absa, Equity, Centenary, Citibank, Dfcu, and Housing Finance Bank — are authorized to submit competitive bids on behalf of investors. Non-competitive bids, open to the general public through commercial banks, will be accepted in full up to Shs200 million per maturity.

Government securities remain a key tool in financing the national budget and managing domestic liquidity. For investors, they offer risk-free returns and an avenue for portfolio diversification at a time when equity markets remain subdued.

Market watchers say demand is likely to remain strong despite the large Shs355 billion issuance. In recent months, several auctions have been oversubscribed, signaling robust appetite from both local banks and offshore investors seeking safe assets in an uncertain global environment.

The upcoming auction will be settled on September 25, with maturities falling due in December 2025, March 2026, and September 2026.

For BoU, the issuance is also part of a broader strategy to deepen the domestic debt market and provide a reliable yield curve for pricing corporate debt. The central bank retains the discretion to adjust the amount on offer depending on market conditions.

With Uganda’s fiscal deficit still wide and external financing constrained, Treasury auctions are expected to remain frequent and sizable through the final quarter of 2025.