Overview:
According to the Ministry of Finance’s Performance of the Economy Report for February 2026, a total of Shs615.98 billion was raised from Treasury Bills (T-Bills), while Shs997.19 billion was mobilised through Treasury Bonds (T-Bonds).
Government raised Shs1.61 trillion from domestic borrowing in February 2026, even as interest rates on Treasury securities declined for the second consecutive month, signalling strong investor demand.
According to the Ministry of Finance’s Performance of the Economy Report for February 2026, a total of Shs615.98 billion was raised from Treasury Bills (T-Bills), while Shs997.19 billion was mobilised through Treasury Bonds (T-Bonds).
Of the total amount raised, Shs853.19 billion was used to finance government budgetary requirements, while Shs759.98 billion went towards refinancing maturing domestic debt.
Declining yields signal strong demand
Interest rates across all Treasury Bill tenors dropped in February, marking the second consecutive monthly decline.
Yields on the 91-day, 182-day and 364-day T-Bills fell to 11.0 percent, 11.9 percent and 12.3 percent, respectively, down from 11.2 percent, 12.7 percent and 14.0 percent recorded in January.
All Treasury Bill auctions remained oversubscribed, with an average bid-to-cover ratio of 2.16, indicating that demand for government securities more than doubled the amount on offer.
Bond yields also fall
A similar trend was recorded in the bond market, where government issued three-year, 10-year and 20-year Treasury Bonds.
Yields declined significantly across all tenors, with the three-year bond dropping to 13.30 percent from 15.90 percent, the 10-year falling to 14.50 percent from 16.75 percent, and the 20-year bond easing to 15.49 percent from 17.63 percent.
Investor confidence improves
The Ministry of Finance attributed the decline in yields to increased investor demand for government securities, supported by improving market conditions.
Analysts point to reduced political risk following the elections and continued participation by offshore investors as key drivers of demand.
The strong appetite for government securities has allowed the Treasury to borrow at lower cost, easing pressure on domestic interest rates.
What it means
The continued decline in yields suggests that government is benefiting from cheaper domestic borrowing, which could create room for lower lending rates in the wider economy if the trend persists.
However, the high level of refinancing—nearly half of the total borrowing—also highlights the growing burden of domestic debt, as government continues to roll over maturing securities.