BoU auction: Long-term securities dominate as six-month paper falters

KAMPALA — Investors leaned heavily toward longer-dated government securities in the latest Treasury Bill auction, signalling a preference to lock in higher returns, even as demand for mid-term paper weakened.

Results from auction No. 1227 released by the Bank of Uganda on Wednesday, April 22,2026, show that while the 364-day and 91-day tenors were oversubscribed, the 182-day bill attracted subdued interest.

The central bank had offered a total of Shs355 billion across the three tenors—91-day, 182-day and 364-day instruments.

Long-term paper dominates

The 364-day Treasury Bill emerged as the most sought-after instrument, underlining investor appetite for longer-term yields amid prevailing market conditions.

Investors submitted bids worth Shs370.6 billion against an offer of Shs255 billion. However, the central bank accepted Shs174.9 billion, pointing to a cautious stance on borrowing costs. The paper cleared at an effective yield of 12.002 percent.

Short-term demand was also strong, with the 91-day bill attracting Shs96.7 billion in bids against an offer of Shs25 billion. The Bank accepted Shs60.7 billion at a yield of 10.384 percent.

Six-month paper underperforms

In contrast, the 182-day bill underperformed, receiving bids worth Shs70 billion against the Shs75 billion on offer. Only Shs7.3 billion was accepted, suggesting a mismatch between investor expectations and the central bank’s pricing.

Market analysts say the weak uptake indicates investors were demanding higher returns than the Bank of Uganda was willing to offer.

Yields edge upwards

The auction results show a clear upward trend in yields across tenors:

• 91-day: 10.384%
• 182-day: 11.041%
• 364-day: 12.002%

This reflects continued demand for higher compensation, particularly for longer-term instruments.

What it means

Treasury Bills are a key monetary policy tool used by the central bank to manage liquidity and finance government operations.

The strong demand for the 364-day paper suggests investors are seeking to lock in double-digit returns, possibly driven by inflation expectations and tighter liquidity conditions.

At the same time, the rejection of a large portion of bids—especially in the six-month category—highlights the central bank’s effort to contain borrowing costs despite ample liquidity in the financial system.

For households and businesses, Treasury Bill rates often serve as a benchmark for wider interest rates, influencing returns on fixed deposits as well as the cost of credit.

Settlement for successful bids is scheduled for April 23, 2026.