Ugandan bond yields likely to creep up at auction

WORRIES about increased government debt and lower donor aid are expected to push yields higher at an auction in Uganda this week, while Kenyan bond yields are set to continue their decline.

The Bank of Uganda plans to sell sh90b (about $34.6m) in two-year bonds and sh50b in 10-year bonds at an auction on Wednesday.

The yield on the two-year bond edged up to 12.98% at a May 22 auction, from 12.3% at the previous sale in March.

“Demand is there because we have got a bit of money maturing next week but the issue would be around the rising yield on both the two year and 10-year. I think the central bank would try and put a cap on where yields would go,” a bond trader said.

Uganda plans to hike taxes to make up for falling donor support over claims of corruption in the Government, Finance Minister Maria Kiwanuka said during the a budget speech last week.