What is a Treasury Primary or Auction Market?
Part 6/15: A Beginner’s Guide to Investing in Treasury Bonds & Bills
The Treasury Primary Market (also called the auction market) is where new treasury bills and bonds are first issued by the government and sold to investors. In Uganda, this happens through the Bank of Uganda (BoU), which holds regular auctions to raise money for government spending.
How Does the Treasury Auction Work?
The government announces the auction – The Bank of Uganda publishes a schedule showing when treasury bills and bonds will be sold.
Investors place bids – Banks, investment clubs, businesses, and individuals submit bids through their primary dealer banks.
The highest bidders win – The government sells the securities to investors offering the most competitive rates.
Successful bidders pay and receive their bonds – If your bid is accepted, you deposit the money, and the bond or T-bill is credited to your CDS account.
Why is the Primary Market Important?
It sets the official interest rate for new treasury securities.
Investors get bonds at the best price since there are no middlemen.
The government raises funds transparently to finance projects.
How Does Impala Market Help?
Impala Market keeps you updated on upcoming treasury auctions, ensuring you don’t miss out on investment opportunities. While you still need a primary dealer bank to bid, our platform helps you track market trends, compare past yields, and make informed decisions.
Once a bond is issued in the primary market, it moves to the secondary (OTC) market, where investors can buy and sell it before maturity. Impala Market helps bond investors find buyers and sellers in the secondary market, our platform helps you track market information to help you make the best decisions in the secondary market.
This is part of the series A Beginner’s Guide to Investing in Treasury Bills and Bonds.
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