Uganda’s latest Treasury bond auction attracted more than Sh1 trillion in accepted bids, with investors showing particularly strong appetite for the five-year government security.
The Bank of Uganda offered Sh990 billion through the reopening of three Treasury bonds; a two-year, five-year and 15-year paper at an auction held on August 26. By the close of the auction, accepted bids had reached Sh1.005 trillion, slightly above the amount that had been put on offer.
The five-year bond drew the biggest response. Government accepted Sh414.39 billion against an offer of Sh330 billion, meaning investors successfully placed bids well above the amount initially targeted.
The bond was priced at a yield of 13.75 per cent. The two-year bond also attracted enough demand for government to accept slightly more than the amount offered. Against an offer of Sh230 billion, accepted bids stood at Sh237.23 billion. The cut-off yield was 11.70 per cent.
Demand was weaker for the 15-year bond, despite it offering investors the highest return. Government had put Sh430 billion on offer but accepted Sh353.41 billion, at a cut-off yield of 15.20 per cent.
The auction results show a clear rise in the return investors are demanding as they commit their money for longer periods. The yield moved from 11.70 per cent on the two-year bond to 13.75 per cent on the five-year paper and 15.20 per cent on the 15-year bond.
For government, the higher yields on longer-dated securities translate into a higher cost of borrowing. For investors, the higher return compensates them for tying up their money for longer and taking on the risk of changing interest rates.
The strong showing by the five-year bond could also point to investors’ preference for medium-term government securities, compared with the longer 15-year paper.
Treasury bonds are a major source of domestic financing for government, while also providing banks, pension funds, insurance companies and other institutional investors with investment opportunities.
The latest auction will be followed by another Treasury bond sale on September 9, 2026, according to the Bank of Uganda.
Auction at a glance;
- Two-year bond: Sh230 billion offered; Sh237.23 billion accepted; yield of 11.70%.
- Five-year bond: Sh330 billion offered; Sh414.39 billion accepted; yield of 13.75%.
- 15-year bond: Sh430 billion offered; Sh353.41 billion accepted; yield of 15.20%.
- Total offered: Sh990 billion.
- Total accepted: Sh1.005 trillion.
