Treasury bills auction attracts Shs567b as investor demand surges.

Uganda’s domestic debt market continues to heat up, with the latest Treasury Bills auction attracting overwhelming investor interest and confirming growing confidence in government securities as a safe and lucrative investment option.

In Auction No. 1218 held on November 19, 2025, the Bank of Uganda reported an extraordinary Shs567.1 billion in total bids, more than seven times the Shs75 billion on offer, making it one of the most aggressively oversubscribed T-bill auctions this year.

The 364-day tenor dominated the auction, pulling in a staggering Shs426.97 billion as pension funds, insurance firms, fund managers, and commercial banks shifted their liquidity toward longer-dated positions to lock in favorable yields.

The central bank accepted Shs274.7 billion for this maturity, reflecting the government’s ongoing preference for longer-term domestic financing to reduce short-term refinancing pressure.

The shorter tenors also maintained strong traction. The 182-day bill received Shs88.21 billion in bids, while the 91-day bill attracted Shs51.89 billion, with competitive bidding forming the bulk of submissions an indication of heightened market participation and expectation of stable returns.

Yields across the auction remained attractive. The 91-day bill posted a 10.705% discount rate, translating into a money market yield of 10.999% and an effective annual yield of 11.461%.

Analysts say the yield environment continues to reflect tight monetary conditions, with the central bank maintaining a cautious stance to manage inflationary pressures and stabilize the shilling.

Market watchers attribute the strong appetite for government paper to a combination of factors, including improved market liquidity, limited high-return investment alternatives, and heightened risk aversion amid global financial uncertainty.

“Investors have maintained a strong preference for risk-free government securities, especially as global markets remain volatile and domestic liquidity improves toward the year’s close,” a senior market analyst noted.

The auction also demonstrated impressive bid-to-cover ratios—3.928 for the 91-day and 3.095 for the 364-day highlighting the sustained depth of demand for Uganda’s sovereign debt.

In total, the government accepted Shs314 billion across all maturities, providing a significant injection of short-term financing needed to support fiscal operations as the country prepares to enter the 2026 economic cycle. The performance reinforces the Treasury Bills market as a critical pillar of Uganda’s domestic borrowing strategy and a key barometer of investor sentiment.

Economists argue that if the current momentum continues, Uganda’s domestic debt strategy may see more reliance on longer-dated securities to smoothen the maturity profile and reduce rollover risks particularly as the country navigates expenditure pressures and election-year dynamics.