Government Bonds Due
Jan 06, 2004
BANK of Uganda (BOU) yesterday introduced the long awaited government treasury bonds, reports <b>Steven Odeu. </b>
BANK of Uganda (BOU) yesterday introduced the long awaited government treasury bonds, reports Steven Odeu.
Tumusiime Mutebile, the BOU Governor who officially launched the bonds at a fully packed Grand Imperial’s Sasa Hall said, the first auction would be conducted next week on Wednesday January 14.
He said the bond will carry a fixed rate coupon of 10% to be paid semi-annually with a maturity of two years, but the 10% is just a coupon rate, investors are free to bid on their own yields of above or below the 10%.
The initial offering will be with sh20b, while other tenures would be introduced in due course.
A bond is a form of a loan, but in this case it is the Government borrowing from the public. Bonds play a big role in reducing the amount of money in circulation that would otherwise result in more inflation.
In order to improve the execution of monetary policy, the Central bank has long sought to increase the types of policy tools available apart from Treasury bills.
“The introduction of the long term treasury bonds will also reduce the need for treasury bills which would relieve pressure at the short end of the market. This is expected to result in lower interest rates,†Mutebile said..
He said the treasury bond will provide a complement to the T-bills and would for the time being be issued solely for monetary policies.
dated securities are universally accepted as liquidity management tools. ENDS
Tumusiime Mutebile, the BOU Governor who officially launched the bonds at a fully packed Grand Imperial’s Sasa Hall said, the first auction would be conducted next week on Wednesday January 14.
He said the bond will carry a fixed rate coupon of 10% to be paid semi-annually with a maturity of two years, but the 10% is just a coupon rate, investors are free to bid on their own yields of above or below the 10%.
The initial offering will be with sh20b, while other tenures would be introduced in due course.
A bond is a form of a loan, but in this case it is the Government borrowing from the public. Bonds play a big role in reducing the amount of money in circulation that would otherwise result in more inflation.
In order to improve the execution of monetary policy, the Central bank has long sought to increase the types of policy tools available apart from Treasury bills.
“The introduction of the long term treasury bonds will also reduce the need for treasury bills which would relieve pressure at the short end of the market. This is expected to result in lower interest rates,†Mutebile said..
He said the treasury bond will provide a complement to the T-bills and would for the time being be issued solely for monetary policies.
dated securities are universally accepted as liquidity management tools. ENDS