Bank of Uganda raises Shs342b in oversubscribed treasury bill auction

KAMPALA – The Bank of Uganda (BoU) has raised Shs342.02 billion in its latest Treasury Bill auction, with strong investor appetite pushing total bids to more than double the amount offered.

According to results of Auction No. 1223 held on Wednesday, February 25, 2026, the central bank had offered Shs355 billion across three tenors — 91-day, 182-day and 364-day Treasury bills. However, investors submitted bids worth Shs794.76 billion, reflecting sustained demand for government securities.

The one-year paper attracted the strongest interest, with Shs647.11 billion in bids against an offer of Shs255 billion. The central bank accepted Shs314.39 billion in the 364-day tenor at a cut-off price of 89.312, translating into a money market yield of 12.000 percent and an effective annual yield of 12.002 percent.

The 182-day bill recorded the highest bid-to-cover ratio at 8.748, signalling intense competition among investors despite the relatively smaller allocation. BoU accepted Shs11.46 billion in this tenor at a cut-off price of 94.632, with a money market yield of 11.376 percent and an effective yield of 11.701 percent.

For the 91-day paper, Shs16.18 billion was accepted at a cut-off price of 97.323, implying a money market yield of 11.033 percent and an effective yield of 11.498 percent. The tenor recorded a bid-to-cover ratio of 2.932.

Overall, the central bank accepted slightly less than the amount on offer, signalling a cautious approach to pricing amid strong demand conditions.

The bulk of successful bids came from competitive institutional investors, including commercial banks and fund managers. However, non-competitive bids — typically submitted by smaller investors who accept the market-determined yield — were also accommodated in full across all tenors.

Under the non-competitive window, Shs1.18 billion was accepted for the 91-day paper, Shs755.2 million for the 182-day bill and Shs3.04 billion for the 364-day tenor.

Settlement of successful bids is scheduled for Thursday, February 26, 2026.

The strong subscription levels reflect continued investor confidence in government securities, which remain attractive due to their risk-free status and relatively high yields. With the one-year paper peaking slightly above 12 percent, the auction signals a firm yield environment in the domestic money market.

Treasury bills are short-term debt instruments issued by the Bank of Uganda on behalf of government to finance budgetary needs and manage liquidity in the financial system. Their performance is often closely watched as an indicator of market liquidity and interest rate trends.