BoU floats Shs990 billion in first Treasury bond sale for FY2026/27

KAMPALA. The Bank of Uganda (BoU) has announced a Treasury bond auction worth Shs990 billion, offering investors an opportunity to invest in government securities across three tenors ranging from two to 15 years.

According to an auction notice issued by the central bank on June 18, the auction will take place on July 1, with settlement scheduled for July 2.

The offering comprises a two-year Treasury bond worth Shs230 billion, a five-year bond worth Shs330 billion, and a 15-year bond worth Shs430 billion.

The two-year bond is a reopening of the 15.250 percent Treasury bond maturing on November 16, 2028, while the five-year and 15-year securities are reopenings of bonds maturing on May 20, 2032 and June 23, 2039, respectively.

Treasury bonds are long-term government debt instruments through which the government borrows money from investors and pays periodic interest until maturity.

Under the latest auction, investors in the two-year bond will be subject to a withholding tax of 20 percent, while investments in the five-year and 15-year bonds will attract a lower withholding tax rate of 10 percent.

BoU said primary dealer banks and other commercial banks are required to submit both competitive and non-competitive bids through the Central Securities Depository (CSD) system by 10am on July 1.

The minimum competitive bid has been set at Shs200.1 million, while non-competitive bids start from Shs100,000.

The central bank noted that non-competitive bids will be accepted in full at the auction cut-off price or yield for amounts of up to Shs200 million per tenor.

Only licensed primary dealer banks will be allowed to submit competitive bids on behalf of investors. The current primary dealers are Absa Bank, Citibank, Centenary Bank, DFCU Bank, Equity Bank, Housing Finance Bank, Stanbic Bank and Standard Chartered Bank.

BoU said all successful bids, whether competitive or non-competitive, will be allocated at a single price determined by the lowest accepted auction price, which corresponds to the highest accepted yield.

The central bank also reserved the right to increase or reduce the amount offered and to accept or reject bids in whole or in part.

The auction comes amid sustained government efforts to raise domestic financing for budgetary needs while providing investors with relatively secure long-term investment opportunities.

Treasury bonds have increasingly attracted interest from pension funds, insurance companies, commercial banks and individual investors seeking stable returns and capital preservation.

Successful investors will receive semi-annual coupon payments according to the schedules attached to the respective bond tenors until maturity.