The Bank of Uganda raised Shs1.1 trillion from the auction of two treasury bills in the month of October 2023, latest reports reveal.
According to the Performance of the Economy Report for October 2023, there were two Treasury bill auctions, one Treasury bond auction and one bond switch operation in the domestic primary market, from which a total of Shs1.137.67 trillion was raised.
Of this, Shs788.72 billion was raised from treasury bills while Shs348.95 billion was from the treasury bond issuance.
“Shs686.14 billion of the total amount raised went towards refinancing maturing domestic debt in the month, while the remainder of Shs451.53 billion was used for financing other items in the budget,” the report adds.
Treasury bills are risk-free short term financial instruments for investment regularly issued to the public by the government through Bank of Uganda. On the other hand, treasury bonds are debt securities issued by the government.
According to the report, all auctions for Treasury Bills were oversubscribed, with the average bid to cover ratio being recorded at 2.84 in October 2023, albeit lower than 4.02 which was registered in September 2023.
However, experts warn that rising Treasury bond yields could shrink cash for investors.
In October 2023, yields (interest rates) edged downwards for the 91-day tenor, remained unchanged for the 182-day tenor, and slightly increased for the 364-day tenor. The annualized yields for the 91-day, 182-day and 364-day tenors for October 2023 were 9.3%, 12.4% and 12.9%, compared to 10.0%, 12.4% and 12.8% in September 2023, respectively. The reduction in yield rates is majorly on account of the decline in inflation.
