Impala Market Weekly Commentary: Uganda Bond Market (Week Ending 05 July 2025)
THIS WEEK IN SUMMARY
60-second brief
Market Headlines
Record Secondary Volume: UGX 1.34T traded (vs UGX 1.47T prior week)
Long-End Volatility: 20Y bonds (2043s) traded in wide 16.15-18.25% range as price discovery continues
Mid-Curve Tightening: 10Y benchmarks (2029s) compressed to 15.50-16.65% on strong institutional demand
Weekly Trader Intelligence: Heavy rotation from bills into bonds; offshore selling in 15Y+ sector; pension funds active in 7-10Y space
Week Ahead: T-Bill auction July 10; Q2 inflation data July 12; potential BoU rate decision watch
Quick Numbers
Total Secondary Volume: UGX 1.34T (↓9% vs UGX 1.47T prior week)
Most Active Bond: 15.000% Jun-2043 → YTM: 16.15-18.25%
Biggest Yield Move: 2043s ±100bps intraday volatility
Offshore Activity: Medium with focus on profit-taking in 15Y+ sector
Talking Points This Week
Yield Driver: "Duration extension trade driving 7-10Y compression as institutions seek yield pickup"
Curve Strategy: "Barbell 2Y bills + 15Y bonds as 10Y looks rich to fundamentals"
Allocation Call: "Favor high-coupon 15Y+ bonds on yield ceiling signals"
Risk Flag: "Watch BoU signals on July 12 - any hawkish tilt could spike short rates"
AUCTION RESULTS - No Primary Issuance This Week
JULY 2, 2025 T-BILL AUCTION RESULTS [Source: Bank of Uganda Press Release, Auction No. 1208]
Tenor Yield B-to-C Accepted Assessment
───── ───── ────── ──────── ──────────
91D 11.50% 7.97x UGX 5.1B 🔥 Exceptional demand
182D 12.13% 2.97x UGX 32.7B ✅ Strong participation
364D 15.25% 1.39x UGX 333.2B 📊 Adequate reception
Key Insights:
Short-end preference dominates (91D scarcity premium)
364D yield attractive but duration caution evident
99.3% competitive bidding shows market maturity
Settlement July 3: UGX 371B total volume
New Issuance Spotlight (FY 2025/26 Calendar Released)
New 10Y Bond: 16.25% Nov-2035 launching August 7 (first "New Bond" since 2043s)
25Y Bond Introduction: First 25-year issuance planned for November 27 (yield curve extension)
Quarterly Pattern: 3Y/15Y/20Y bonds every 6 weeks; 2Y/5Y bonds monthly
Market Impact: New 10Y benchmark could pull flows from existing 2029s and 2034s
Timing Strategy: August launch gives 3 months to build benchmark size before year-end
SECONDARY MARKET ACTIVITY
Where the real trading happens
Weekly Turnover Summary
Total Volume: UGX 1.34T (↓9% vs prior week's UGX 1.47T)
Number of Trades: 280+ transactions (estimated from reports)
Average Trade Size: UGX 4.8B (large institutional flows dominating)
Most Active Session: Wednesday (July 3) - UGX 600B mega-session
Bond-by-Bond Activity
Dealer Desk Heatmap (Aggregate Activity by Tenor)
Trading Desk Intelligence
Bank Positioning: Major rotation from T-bills into 7-10Y bonds as institutions hunt yield
Offshore Flows: Moderate selling pressure in 15Y+ sector - profit-taking after Q2 gains
Sourcing Notes: 13.5% Jul-2026 bonds available at most dealers; seeking 16.625% Aug-2026 (scarce)
Liquidity Commentary: Spreads widened 10-15bps on large block trading; depth improving in benchmarks
Daily Bond Runs: Strong inventory turnover in 2043s; dealers rebuilding 2029 positions mid-week
Current Benchmark Yields
91D T-Bill: ~10.00%
1Y: ~12.50%
2Y: ~13.50%
5Y: ~15.50%
7Y: ~16.00%
10Y: ~16.20%
15Y: ~17.00%
20Y: ~17.50%
OUTLOOK
What's coming and what to watch
📈 Yield Curve Direction & Scenarios
Base Case (65% probability): Continued curve flattening as long-end finds ceiling
10Y: 16.20% → 15.80% target (institutional demand)
15Y: 17.00% → 16.60% target (value buyers emerging)
20Y: 17.50% → 17.20% target (technical resistance broken)
Risk Case (35% probability): BoU hawkish surprise triggers bear steepening
Key triggers: Inflation spike, FX pressure, fiscal deterioration
Yield impact: +50-100bps across curve, long-end underperforms
Week Ahead Calendar
July 10: 3Y/10Y/20Y T-Bond auction (UGX 1.5T+ expected)
July 12: Q2 inflation data release (forecast: 3.2% vs 3.1% prior)
July 15: Mid-month tax collections (liquidity impact)
Upcoming Primary Market Events
July 9: New 3Y bond launch
August 6, 26 November: Historic 25-year bond debut (curve extension milestone), New 25Y bond reopening
September 3, October 29: New 3Y reopening
August 6, October 1, November 26: New 5Y bond launch, New 5Y bond reopening + 15Y/20Y bonds
Key Themes to Monitor
New Benchmark Positioning: How market prices upcoming 16.25% Nov-2035 vs existing 10Y paper
25Y Curve Extension: Institutional appetite for ultra-long duration (pension/insurance focus)
Supply Calendar Impact: Regular issuance pattern provides predictable trading opportunities
Benchmark Rotation: Potential flows from 2029s/2034s into new 2035 benchmark
Macro → Trading Desk Translation
Inflation data impact: Higher prints = front-end selloff, long-end resilience
BoU policy shifts: Any hawkish tilt hits 2-5Y hardest
FX volatility: USD strength = offshore selling pressure on long bonds
📞 OTC DESK CALL TO ACTION
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This Week's Sourcing Corner
SEEKING: 16.625% Aug-2026 (premium to par), 17.75% May-2042 (any size)
AVAILABLE: 13.5% Jul-2026 (multiple dealers), 14.375% Feb-2033 (large blocks)
Community Intelligence
Wednesday Mega-Session: UGX 600B traded - largest single day since March
Dealer Rotation: Active inventory management in long-end benchmarks
Settlement Notes: T+2 standard maintained despite high volumes
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