Business
Govt seeks sh990b through fresh treasury bond auction
The auction, issued under the Public Finance Management Act, 2015, involves the re-opening of three treasury bond tenors with a combined value of sh990 billion.
Govt seeks sh990b through fresh treasury bond auction
By: John Masaba, Journalist @New Vision
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The Bank of Uganda (BoU) has announced a sh990 billion treasury bond auction as it seeks to raise funds from the domestic market amid strong economic growth and emerging inflationary risks.
The auction, issued under the Public Finance Management Act, 2015, involves the re-opening of three treasury bond tenors with a combined value of sh990 billion.
A tenor refers to the period before a bond or loan is fully repaid.
According to the central bank, the offer comprises a two-year bond worth sh330 billion carrying a coupon rate of 15.25% and maturing on November 16, 2028. The bond attracts a withholding tax of 20%.
BoU is also offering a five-year bond valued at sh230 billion with a coupon rate of 15.0%, maturing on May 20, 2032. This bond carries a withholding tax of 10%.
The largest portion of the auction is a 15-year bond worth sh430 billion. It carries a coupon rate of 15.8% and will mature on June 23, 2039. Like the five-year bond, it attracts a withholding tax of 10%.
The central bank said bids must be submitted electronically through the Central Securities Depository (CSD) by 10:00am on July 1, 2026, which is also the auction date.
BoU is also offering a five-year bond valued at sh230 billion with a coupon rate of 15.0%, maturing on May 20, 2032. This bond carries a withholding tax of 10%.
The largest portion of the auction is a 15-year bond worth sh430 billion. It carries a coupon rate of 15.8% and will mature on June 23, 2039. Like the five-year bond, it attracts a withholding tax of 10%.
The central bank said bids must be submitted electronically through the Central Securities Depository (CSD) by 10:00am on July 1, 2026, which is also the auction date.
Successful bids will be settled on July 2, 2026.
BoU noted in a statement on Monday (June 22) that only the country’s eight Primary Dealer Banks are eligible to submit competitive bids. These are Absa Bank Uganda, Citi Bank Uganda, Centenary Bank, DFCU Bank, Equity Bank Uganda, Housing Finance Bank, Stanbic Bank Uganda and Standard Chartered Bank Uganda.
Other commercial banks and members of the public may participate through non-competitive bids.
The minimum competitive bid has been set at sh200.1 million, while non-competitive bids start at sh100,000.
BoU said non-competitive bids of up to sh200 million per tenor will be accepted in full at the cut-off price.
All successful bids will be allocated at a single price, determined by the lowest accepted auction price per sh100, which corresponds to the highest accepted yield.
The central bank reserved the right to vary the amounts on offer or to accept or reject applications in whole or in part.
Strong economic outlook
Analysts say the latest issuance reflects efforts to balance financing government operations and managing liquidity in the economy.
The auction is expected to help absorb excess liquidity from the banking sector while providing government with financing for priority expenditures.
BoU has maintained the Central Bank Rate (CBR) at 9.75%, while treasury bond coupon rates ranging between 15 percent and 15.8 percent continue to offer attractive returns to investors.
Growth outlook
Uganda’s economy is projected to grow between 6.5% and 7% in the 2025/26 financial year, driven by expansion in agriculture, industry and services.
Over the medium term, growth is expected to average about 8%, supported by continued public investment, implementation of programmes such as the Parish Development Model and anticipated gains from the country’s oil and gas sector.
Although headline inflation has remained below the government’s medium-term target of 5% for more than a year, averaging about 3 percent, BoU has cautioned that risks remain tilted to the upside.
Why govts issue treasury bonds
Treasury bonds are long-term government securities through which the state borrows money from investors and agrees to pay interest at regular intervals before repaying the principal at maturity.
Governments issue bonds for several reasons, including financing budget deficits, funding infrastructure projects, refinancing existing debt and supporting monetary policy operations.
Central banks also use government securities to regulate liquidity in the economy. Selling bonds helps absorb excess cash from the financial system, while buying them injects liquidity and stimulates lending.
Treasury bond yields also serve as a benchmark for pricing loans and other financial instruments across the economy.
Economists say the latest BoU auction highlights the growing importance of the domestic debt market in financing government programmes while supporting macroeconomic stability.
BoU said non-competitive bids of up to sh200 million per tenor will be accepted in full at the cut-off price.
All successful bids will be allocated at a single price, determined by the lowest accepted auction price per sh100, which corresponds to the highest accepted yield.
The central bank reserved the right to vary the amounts on offer or to accept or reject applications in whole or in part.
Strong economic outlook
Analysts say the latest issuance reflects efforts to balance financing government operations and managing liquidity in the economy.
The auction is expected to help absorb excess liquidity from the banking sector while providing government with financing for priority expenditures.
BoU has maintained the Central Bank Rate (CBR) at 9.75%, while treasury bond coupon rates ranging between 15 percent and 15.8 percent continue to offer attractive returns to investors.
Growth outlook
Uganda’s economy is projected to grow between 6.5% and 7% in the 2025/26 financial year, driven by expansion in agriculture, industry and services.
Over the medium term, growth is expected to average about 8%, supported by continued public investment, implementation of programmes such as the Parish Development Model and anticipated gains from the country’s oil and gas sector.
Although headline inflation has remained below the government’s medium-term target of 5% for more than a year, averaging about 3 percent, BoU has cautioned that risks remain tilted to the upside.
Why govts issue treasury bonds
Treasury bonds are long-term government securities through which the state borrows money from investors and agrees to pay interest at regular intervals before repaying the principal at maturity.
Governments issue bonds for several reasons, including financing budget deficits, funding infrastructure projects, refinancing existing debt and supporting monetary policy operations.
Central banks also use government securities to regulate liquidity in the economy. Selling bonds helps absorb excess cash from the financial system, while buying them injects liquidity and stimulates lending.
Treasury bond yields also serve as a benchmark for pricing loans and other financial instruments across the economy.
Economists say the latest BoU auction highlights the growing importance of the domestic debt market in financing government programmes while supporting macroeconomic stability.