Uganda Auction Results Signal Continued Downward Pressure on Yields

Friends,

Today’s auction results for the 20-year and 10-year Treasury bonds are finally out, and the pressure on interest rates to keep coming down is continuing. This is especially evident when compared with the previous auction outcomes.

The 20-year bond, which matures in 2043, recorded a cut-off yield of 15.65% in the latest auction. This compares with its last auction, when it cleared at 15.95%, reflecting a 30 basis point reduction in just under a month.

The 10-year bond, which matures in 2037, also came out at a lower yield. It recorded a cut-off yield of 15.0%, compared with around 15.45% in July. That represents a 45 basis point reduction in interest rates, which is a significant move over a short period.

In terms of pricing, investors who bought the 10-year bond paid a premium of 8.5%, while those who bought the 20-year bond received a 2% discount. At the same time, the 3-year bond was also auctioned at a cut-off yield of 12.0% with a 7.3% premium.

The results point to continued downward pressure on Uganda’s bond yields, with investors still showing strong appetite for government securities across the curve.