Treasury Bonds Investments. Auctions results out. Rates falling!!
Feb 19, 2025
Friends,
Today's auction results are out, and as expected, interest rates have dropped from their significant highs in December 2024 and January 2025. The market is now beginning to price in this trend and is expected to continue in the coming weeks, with interest rates on various treasury bonds tenors likely decreasing every week.
Today’s results.
UG12G0907265: 2-Year Treasury bond with a coupon rate of 13.5% and a withholding tax (WHT) of 20%, maturing in July 2026 coming out at 15.7%
UG0000001533: 5-Year Treasury bond with a coupon rate of 14.25% and a WHT of 10%, maturing in August 2029.
The interest rate for this bond has dropped from 16.75% in early January to the current rate of 16.25%, marking a 50-basis point decrease in just over 30 days. This shift indicates the direction in which various interest rates are heading.
As I always say, time in the market is better than timing the market. A dear friend of mine purchased this five-year bond from the secondary market two weeks ago and secured a better rate than most of us who waited for the primary market to buy this bond.
Therefore, when investing in treasury bonds, it is crucial to be proactive and engaged. My friend took a calculated risk by buying the five-year bond from the secondary market at a favorable rate, paying less than what others would pay in the primary market. This means that two weeks ago, interest rates were significantly better than they are now.
UG12K2306393: 15-Year Treasury bond with a coupon rate of 15.8%. Its interest rate has dropped from 17.5%, which investors enjoyed, to the current rate of 17%. Given the time that has passed, the current discount is around 5% for every 100 shillings, attributed to accrued interest.
Therefore, someone who invested in January received a better deal compared to someone investing in the same bond now in February.
Tomorrow, Post Bank Uganda will be hosting an additional session to discuss investments in treasury bonds, highlighting the available opportunities and the services they offer to the public. This is a great chance for those interested in taking advantage of these types of investments. The event will take place on Twitter Spaces at 5:30 PM Ugandan time. For anyone who wants to learn more and engage in this discussion, please tune in!
