Overview:
Auction of three-, 10- and 20-year securities comes as government prepares to roll out its record Shs84.39 trillion budget for 2026/27.
The Bank of Uganda (BoU) has invited investors to participate in a Shs990 billion Treasury bond auction this week as government intensifies efforts to finance its record Shs84.39 trillion budget for the 2026/27 financial year.
According to an auction notice issued by the central bank, investors will bid for three Treasury bond instruments worth a combined Shs990 billion during an auction scheduled for Wednesday, June 10.
The offer comprises a three-year bond worth Shs230 billion, a 10-year bond valued at Shs330 billion, and a 20-year bond worth Shs430 billion. All three securities are reopenings of previously issued government bonds.
Successful bidders will settle their purchases on June 11, the same day Finance Minister Henry Musasizi is expected to present the national budget for the 2026/27 financial year at Kololo Ceremonial Grounds.
The auction comes at a time when government is seeking to mobilise additional resources to finance rising public expenditure and development priorities under the Fourth National Development Plan (NDP IV).
Treasury bonds are debt instruments through which government borrows money from investors and commits to repay the principal together with periodic interest payments over a specified period.
The three-year bond carries a coupon rate of 15.55 percent, while the 10-year and 20-year bonds offer annual coupon rates of 16.25 percent and 15 percent respectively.
Market analysts say the longer-term bonds are likely to attract institutional investors such as pension funds, insurance companies and fund managers seeking stable returns over an extended period.
The Uganda Revenue Authority has been tasked with collecting Shs44.5 trillion in domestic revenue during the coming financial year, but government will still rely on domestic borrowing, grants and external financing to bridge the funding gap.
Bank of Uganda said competitive bids will only be accepted through authorised Primary Dealer Banks, while retail and institutional investors can access the securities through commercial banks and other approved channels. Bids must be submitted through the Central Securities Depository by 10am on June 10.
The minimum competitive bid has been set at Shs200.1 million, while non-competitive investors can participate with as little as Shs100,000. Non-competitive bids will be accepted in full up to Shs200 million per tenor at the auction’s cut-off yield.
Under the auction rules, all successful bidders will be allocated securities at a single price corresponding to the highest accepted yield.
The central bank, however, retains the right to increase or reduce the amount offered and to accept or reject bids in part or in whole depending on market conditions.
Uganda’s domestic debt market has become an increasingly important source of financing for government spending, with Treasury bonds and bills attracting growing participation from both local and foreign investors seeking relatively secure long-term returns.
The outcome of Wednesday’s auction is expected to provide an early indication of investor appetite for government securities as the country prepares to implement its largest national budget on record.