Overview:
Competitive bids are restricted to Primary Dealer Banks, with a minimum investment of Shs200.1 million. The authorised primary dealers include Absa Bank, Citibank, Centenary Bank, DFCU Bank, Housing Finance Bank, Stanbic Bank and Standard Chartered Bank.
KAMPALA: The Bank of Uganda (BoU) is seeking to raise Shs350 billion through a Treasury bill auction scheduled for Wednesday, November 4, as the government continues to tap the domestic debt market to finance its cash requirements.
According to a public notice issued by the central bank, the offer comprises three securities with maturities of 91 days, 182 days and 364 days, with the longest-term instrument accounting for the bulk of the planned borrowing.
The 364-day Treasury bill will account for Shs300 billion, representing about 86 per cent of the total offer, while the 182-day and 91-day instruments will account for Shs35 billion and Shs15 billion, respectively.
The auction will take place on November 4, with successful bidders expected to settle their investments on November 5, according to the notice issued under the Public Finance Management Act, 2015.
The respective securities will mature on February 4, 2027, for the 91-day bill, May 6, 2027, for the 182-day bill and November 4, 2027, for the 364-day instrument.
The central bank has set 10am on November 4 as the deadline for submission of bids through the Central Securities Depository (CSD).
Participation in the auction is divided between competitive and non-competitive bidders.
Competitive bids are restricted to Primary Dealer Banks, with a minimum investment of Shs200.1 million. The authorised primary dealers include Absa Bank, Citibank, Centenary Bank, DFCU Bank, Housing Finance Bank, Stanbic Bank and Standard Chartered Bank.
Other investors can participate through commercial banks under the non-competitive category, which allows investments of up to Shs200 million per maturity. The minimum investment under this category is Shs100,000.
Successful bidders will be allocated securities at a single price, determined by the lowest accepted auction price per Shs100, corresponding to the highest accepted yield.
The Bank of Uganda, however, reserves the right to adjust the amounts offered or accept or reject bids, either wholly or partially.
Treasury bills are short-term government securities issued to raise money to meet government financing requirements. They are also used by investors, including commercial banks, companies and individuals, as an avenue for investing surplus funds.
Returns on the securities are determined through competitive bidding, with investors effectively buying the bills at a discount and receiving their face value when the securities mature.
The latest offer provides investors with an opportunity to lock in returns across three investment periods, although the yields will only be established after t