Overview:
The July 29 auction attracted strong demand across all four bond tenors on offer—two-year, five-year, 15-year and 25-year re-openings—with investors chasing fixed-income returns of up to 16 percent.
KAMPALA. Investors submitted bids worth Shs3.23 trillion for Uganda government Treasury bonds in the latest auction, more than double the Shs1.4 trillion the Bank of Uganda (BoU) had planned to raise, highlighting sustained appetite for government securities despite the central bank’s cautious borrowing strategy.
The July 29 auction attracted strong demand across all four bond tenors on offer—two-year, five-year, 15-year and 25-year re-openings—with investors chasing fixed-income returns of up to 16 percent.
BoU eventually accepted bids worth Shs1.36 trillion, slightly below the target amount, signalling that while demand remained robust, the central bank was unwilling to accept bids at higher borrowing costs. Settlement of the successful bids is scheduled for July 30.
The strongest investor interest was concentrated in long-term securities, reflecting confidence in Uganda’s sovereign debt and the willingness of pension funds, insurance companies and other institutional investors to lock in attractive yields over extended periods.
The 25-year Treasury bond, maturing in July 2050, emerged as the most sought-after instrument. Against an offer of Shs350 billion, investors submitted bids worth Shs1.28 trillion, almost four times the amount on offer.
BoU accepted Shs360.97 billion at a cut-off yield of 16 percent.
Demand was also strong for the 15-year bond, where investors submitted Shs520.56 billion in bids against an offer of Shs450 billion. However, the central bank accepted only Shs111.28 billion, maintaining a cut-off yield of 15.65 percent.
The decision to reject a significant portion of the bids indicates BoU’s efforts to manage government’s borrowing costs despite strong market demand.
Interest remained equally firm in shorter-dated securities.
The five-year bond attracted bids worth Shs1.06 trillion, more than three times the Shs350 billion on offer. BoU accepted Shs649.75 billion at a cut-off yield of 14.25 percent.
Meanwhile, the two-year bond, which matures in November 2028, received bids worth Shs368.33 billion against an offer of Shs250 billion. The central bank accepted Shs240.58 billion at a yield of 12.5 percent.
Overall, competitive bids from institutional investors dominated the auction, although non-competitive bids—typically submitted by smaller institutions and retail investors—accounted for more than Shs22.7 billion of the accepted allocations.
The latest auction underscores continued investor confidence in Uganda’s domestic debt market at a time when government is financing implementation of the Shs84.39 trillion national budget for the 2026/27 financial year.
Market analysts say the strong demand reflects the attractiveness of government securities, which continue to offer relatively high returns compared with many alternative investments, while also providing investors with a low-risk avenue backed by the sovereign.
The heavy oversubscription, particularly for the 15-year and 25-year bonds, also suggests that long-term investors remain confident in Uganda’s macroeconomic outlook and are willing to commit capital over longer investment horizons.
However, BoU’s decision to reject a sizeable share of bids—especially on the longer tenors—signals its determination to contain government’s domestic borrowing costs and prevent yields from rising beyond desired levels.
The outcome means government secured most of its funding requirements without significantly increasing the cost of debt, while investors who secured allocations locked in returns ranging between 12.5 percent and 16 percent depending on the maturity of the bonds.
Auction at a glance
| Bond tenor | Offered | Bids received | Accepted | Cut-off yield |
|---|---|---|---|---|
| 2-Year | Shs250bn | Shs368.3bn | Shs240.6bn | 12.50% |
| 5-Year | Shs350bn | Shs1.06tn | Shs649.8bn | 14.25% |
| 15-Year | Shs450bn | Shs520.6bn | Shs111.3bn | 15.65% |
| 25-Year | Shs350bn | Shs1.28tn | Shs361bn | 16.00% |
Why it matters: The strong oversubscription reflects healthy liquidity in the financial system and continued investor confidence in Uganda’s government securities. At the same time, the central bank’s selective acceptance of bids shows its resolve to finance government borrowing without pushing interest costs higher.