BoU’s treasury bond auction draws Shs2.2 trillion in bids

KAMPALA — Investors demonstrated strong appetite for government securities on Wednesday after the latest Bank of Uganda (BoU) Treasury bond auction attracted bids worth more than Shs2.2 trillion against a total offer of Shs990 billion.

According to results released by the central bank, the auction covered the re-opening of three Treasury bonds with tenors of three, 10 and 20 years. The securities offered were worth Shs230 billion, Shs330 billion and Shs430 billion respectively.

The strongest demand was registered in the 10-year bond, which attracted bids worth Shs1.12 trillion, more than three times the amount on offer. The 20-year bond received bids worth Shs684.14 billion while the three-year bond attracted Shs415.32 billion in subscriptions.

The auction results indicate that investors continue to favour longer-dated government securities amid expectations of stable returns and confidence in Uganda’s long-term economic outlook.

For the three-year bond maturing on July 6, 2028, BoU offered Shs230 billion and received bids worth Shs415.32 billion. The central bank accepted bids worth Shs287.82 billion, translating into a bid-to-cover ratio of 1.443.

The 10-year bond, which matures on November 8, 2035, was the most sought-after security during the auction. Against an offer of Shs330 billion, investors submitted bids worth Shs1.12 trillion. BoU accepted Shs860.26 billion, with the bond recording a bid-to-cover ratio of 1.300.

Meanwhile, the 20-year bond maturing on June 18, 2043 attracted bids worth Shs684.14 billion against an offer of Shs430 billion. The central bank accepted Shs527.64 billion worth of bids, yielding a bid-to-cover ratio of 1.297.

The accepted bids across the three bonds amounted to about Shs1.68 trillion, significantly above the total amount initially offered by the government.

Auction results also showed varying yields across the securities, reflecting investor expectations over different investment horizons. The three-year bond cleared at a yield of 13.3 percent, while the 10-year bond registered a yield of 15.625 percent. The 20-year bond cleared at the highest yield of 16.5 percent.

Market analysts say the strong subscription levels underscore continued investor confidence in government debt instruments, which are widely regarded as low-risk investments. Treasury bonds have increasingly attracted institutional investors such as pension funds, insurance companies and commercial banks seeking predictable long-term returns.

The results come at a time when government continues to rely on the domestic debt market to finance development expenditure while providing investment opportunities for both institutional and individual investors.

The bonds will be settled on June 11, according to the Bank of Uganda.