Impala Market Weekly Commentary: Uganda Bond Market Insights (Week Ending 30 May 2025)
UGX 2.4Trillion Private Placement Digested | 2043 Yield Holds at 18.25%
Private Placement Auction – 28 May 2025
The Bank of Uganda concluded a significant UGX 2.4 trillion private placement auction covering 7 benchmark bonds across the curve:
Key Insights:
All maturities cleared close to secondary market levels, reinforcing price discipline.
High acceptance ratios (100% for 10Y tenors) show strong targeted participation.
2043 cut-off yield (18.25%) confirms the long end remains under upward pressure.
Market Performance vs Playbook Forecast (Week Ending 23 May vs 30 May)
Yield Curve Comparison (Trailing 6 Weeks)
The chart below shows how yields have moved across maturities over the past six weeks:
Key Observations:
Short-term (1Y) yields are anchored around 12.5%.
Mid-curve yields (2Y–5Y) have shown gradual firming.
Long-end (10Y–20Y) continues to push higher, closing May at ~18.25%.
The curve remains steep, favoring carry and switch strategies.
Alpha Insights & Interpretation
The market absorbed the UGX 2.4T issuance without dislocation, a signal of strong institutional capacity and confidence.
Term structure remained stable, with most trades settling within ±10bps of cut-off yields.
Curve steepness persists, with 2043 yielding 18.25% vs 12.5% at 1Y, a 575bps spread.
📌 This validates carry strategies and curve switch opportunities remain in play.
Trading Strategy – Week Starting 03 June
1. Curve Carry & Rotation
Continue rotating from short-dated high-duration T-Bills into 2032–2043 for carry pickup.
2. Rebalance Long-End Exposure
Accumulate 2043 below 89.0; target exit above 91.5.
Add 2039s between 96.0–98.5 as secondary curve anchor.
3. Watch Auction Fallout
Monitor bid-offer spreads in 2029, 2034 post-placement — any softness = re-entry.
Outlook
No auction scheduled next week. Expect post-placement digestion with technical support at current yield levels.
Monitor political headlines and June budget cues for any signs of fiscal slippage.
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