Bank of Uganda to Raise UGX 990 Billion in Upcoming Treasury Bond Auction
July 1, 2025
Investors,
The Bank of Uganda has officially released the invitation to tender for three treasury bonds that will be auctioned next week on July 9th, 2025, with the settlement date set for Thursday, July 10th, 2025.
The first bond is a New 2028 3-year treasury bond, which carries a 20% withholding tax. The Bank of Uganda plans to raise approximately UGX 230 billion through this bond.
The second bond is a ten-year bond with a 16.25% coupon rate, which is being reopened and has a withholding tax of 10%. The Bank of Uganda aims to raise around UGX 330 billion for this bond.
Notably, in the secondary market—particularly from the buy side, where banks are purchasing and institutional investors are acting as market makers—the bidding for the ten-year bond is around 17%. However, when selling, the ask yield is approximately 16.6%.
If we use these ranges to project the potential results of the upcoming auction for the ten-year bond, we can expect yields to range between 16.6% and possibly reach 17%. However, it is unlikely to exceed 17.5%, especially considering that this bond is being reopened and has a relatively high coupon rate, which may lead to more competitive bidding and a lower yield or cutoff price at that time.
In the same auction, the Bank of Uganda is reopening one of the public's favorites: the 20-year bond, which has a 15% coupon rate and a 10% withholding tax. The plan is to raise close to UGX 430 billion in this upcoming auction, bringing the total amount being tendered to UGX 990 billion.
This marks a strong start to the year for treasury bonds and suggests that higher yields may continue in the coming months before any shocks occur that could lower the yields.
Currently, the 20-year treasury bond is trading between 17.2% and 17.5%, with 17.2% being the ask yield and 17.5% the bid yield. Therefore, we can expect the results of next week's auction to be around this range or even higher than 17.5%.
In the last auction, this bond yielded 17.945%. It remains to be seen if the results will be similar this time. It is important to note that the settlement on July 10th, 2025, means that those purchasing the 20-year bond will do so without any accrued interest, resulting in a full discount. The next coupon payment will be due in Jan 2026.