Uganda T-Bill Auction Review – May 21, 2025

By Impala Market Team

Yields Climb Higher as BoU Stays Selective

The Bank of Uganda’s Treasury Bill auction on May 21 (Auction No. 1205) confirmed two things:

• Investors are still eager to lend to government at attractive yields

• BoU is staying disciplined, accepting only what it needs — and not at any price

Let’s dive into the results and what they tell us about where the market is heading.

Auction Summary

Key Takeaways

1. The 1-Year T-Bill Is Still King

With over UGX 530 billion in bids and UGX 447 billion accepted, the 364-day T-bill remains the market’s favorite. Its 15.50% yield offers high returns with low risk.

BoU met most of the demand at this tenor — a sign it’s comfortable funding longer and letting the 1-year yield rise slightly (from 15.25% last month).

2. Short-Term Bids Rejected (Again)

Only UGX 10.96B out of 38.59B in 91-day bids were accepted — less than half.
The 182-day also saw limited uptake, with just UGX 11.93B accepted out of UGX 85B.

BoU is clearly being cautious at the short end — either to avoid locking in high short-term borrowing costs or because it has enough short-term liquidity for now.

Yields Are Trending Up

Here’s how yields moved compared to the previous auction on April 23:

While the 91-day rate held steady, the longer two tenors climbed, another signal that the market is demanding more compensation to lend longer in an uncertain environment.

Yield Curve Snapshot

Here’s what the yield curve looks like now vs last month:

🟡 April: smooth and rising
🟢 May: still steep, but now steeper at the long end

This shows that the cost of borrowing is rising for the government, especially on anything beyond 3 months.

Impala Market Insight

• The BoU continues to walk a tightrope: accepting enough to fund government operations, but not so much that it spikes interest rates.

• The steep curve suggests that investors expect rates to stay high or even rise slightly - either due to inflation concerns or tighter liquidity.

• For businesses and investors, 1-year T-bills are still one of the most attractive instruments in Uganda's financial market right now.

What This Means for You

For Businesses:

• Loan rates will remain high

• Working capital borrowing is likely to stay expensive

• Consider 1-year bills for cash reserves

For Investors:

• The 1-year T-bill offers strong risk-adjusted returns

• The 6-month tenor may be worth watching if yields continue to rise

For Policymakers:

• Expect more pressure on short-end demand if liquidity tightens further

• Maintaining this balance will be key to market confidence

Stay tuned as we track the next auction and report on the secondary market response.

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Traders, Dealers & Investors
Post your bond runs and trade interests on Impala Market. Let’s improve price discovery and deepen secondary market participation.

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