Uganda Treasury Bill Auction Review: 13 August 2025
What the August 13 auction told us about investor sentiment, yield pressure and what to watch next
Auction Summary
Auction No. 1211 | Date: 13 August 2025
Instruments Offered: 91-day, 182-day, and 364-day T-bills
Total Amount Offered: UGX 355 billion
Source: Bank of Uganda Auction No. 1211
Key Observations
1. Strong Demand for Long-End (364-Day)
The 364-day T-bill continues to be the anchor for investors seeking high yield with moderate liquidity risk.
Bid-to-cover ratio of 1.94 with UGX 494.6B tendered vs UGX 255B offered shows solid institutional interest.
The cut-off yield held at 15.254%, essentially flat from the last auction, showing BoU is holding the line on yield pressures at the long end.
2. Mid-Curve (182-Day) Bids Remain Balanced
Investors remain cautious about reinvestment risk in H2 FY2025/26.
With a yield of 13.237%, the 182-day tenor has become a popular play for balancing yield and duration risk.
Bid-to-cover was slightly lower at 1.40×, showing measured participation.
3. Short-End (91-Day) Cut Sharply
Only UGX 6.67B was accepted out of UGX 46.9B tendered on the 91-day — a small fraction of total bids.
Cut-off yield of 10.999% came in flat, indicating BoU is rejecting attempts to push short-end rates higher.
This mirrors recent patterns in the 2-year bond auctions: the short end is now being actively used by BoU as a liquidity control tool.
Trend Insight: Curve Dynamics Hold
The yield curve remains steep, with the spread between the 91-day and 364-day now over 420 bps.
The curve’s shape indicates that markets expect continued fiscal pressure and are demanding a term premium for holding longer-dated securities.
The curve has not inverted — but the front end is tightly controlled, while the back end remains investor-driven.
So What?
For Investors: The 364-day remains the most rewarding paper, especially for fixed-income portfolios. However, demand for the 182-day tenor suggests cautious positioning against fiscal or political shocks ahead of FY25/26 budget implementation.
For Traders: Short-end volatility could rise if BoU continues under-allocating 91-day paper. Monitor secondary market bids closely.
For Policymakers: The healthy bid-to-cover ratios show there’s still liquidity — but rising yield expectations suggest investor caution is building. The short-end suppression may be sustainable only if inflation and policy credibility hold.
📌 Final Word:
“BoU’s rejection of short-end pressure and steady long-end allocation is a classic curve maintenance play. For now, yields are stable but investor sentiment is quietly watching fiscal policy and reinvestment risks unfold.”
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