The Bank of Uganda (BoU) has announced a scheduled auction for four categories of treasury bonds on Wednesday, August 6, 2025 with an aim to finance government operations and manage public debt.
The central bank aims to raise a total of Shs 1.4 trillion through this multi-tenure auction, reflecting the government’s continued reliance on domestic debt markets amid rising fiscal pressures.
The auction includes four classes of bonds: 2-Year Re-Opening: 14.125% due Jan 13, 2028 – Shs 200 billion; 5-Year New Issuance: Maturing Aug 01, 2030 – Shs 300 billion; 15-Year Re-Opening: 15.800% due Jun 23, 2039 – Shs 400 billion and 25-Year New Issuance: Maturing Jul 07, 2050 – Shs 500 billion
The settlement date for successful bids is set for Thursday, August 7, 2025, just a day after the auction.
Strategic Goals and Market Implications
The planned issuance aligns with Uganda’s medium-term debt management strategy, which seeks to balance short-term borrowing with longer-dated instruments. By introducing new 5-year and 25-year tenures, the government signals a commitment to extending its debt maturity profile, thereby reducing refinancing risk.
The re-openings of the 2-year and 15-year bonds offer continued liquidity for existing instruments, while the high-interest coupon rates—14.125% and 15.800%, respectively—are designed to attract institutional investors such as pension funds, insurance firms, and commercial banks.
The offering comes amid a tight monetary environment, with inflation pressures moderating but fiscal consolidation efforts still in early stages. The central bank’s move to offer long-term bonds may also help lock in current rates ahead of potential future shifts in global or regional financial conditions.
Tax Considerations and Minimum Bids
BoU has announced that withholding tax will be applied as follows: 20.0% for 2-year and 5-year bonds and 10.0% for 15-year and 25-year bonds
This tax policy favors long-term investors and is expected to stimulate demand for the longer-duration assets, particularly the 25-year bond—an instrument rarely issued in African bond markets.
The minimum competitive bid for each category is set at Shs 100 million, while the minimum non-competitive bid is Shs 100,000. Bidders are encouraged to express their offers using the yield-to-maturity (YTM) model, and indicative yields include 14.125% for the 2-year bond and 15.800% for the 15-year bond, based on previous market references.
According to local bond market analysts, the auction will test investor appetite for long-term debt amid ongoing concerns over Uganda’s growing public debt, which stood at Shs 96 trillion as of the end of FY2024/25, or roughly 50.4% of GDP (Ministry of Finance, 2025 Budget Speech). The government’s shift toward domestic debt issuance also helps reduce foreign exchange risk but comes at the cost of potentially crowding out private sector credit.
“The issuance of a 25-year bond is a bold move,” said a fixed-income analyst at Stanbic Bank Uganda. “It offers pension schemes and long-horizon funds a rare opportunity to lock in relatively high yields for a long period, but its success will depend on market confidence in the government’s fiscal trajectory.”
The auction comes just weeks after the Minister of Finance presented the Shs 72.1 trillion FY2025/26 national budget, of which Shs 9.5 trillion is expected to be financed through domestic borrowing (BoU Budget Outlook, 2025). These treasury bond auctions serve as a primary vehicle for meeting that financing target.
BoU’s continued transparency in publishing auction details and settlement calendars is a critical aspect of its efforts to develop Uganda’s capital markets and encourage broad investor participation.
With Uganda aiming to expand its infrastructure, healthcare, and education sectors without excessive reliance on external borrowing, treasury bond auctions like this one remain crucial. Investors will be closely watching demand dynamics, especially in the new 5-year and 25-year maturities, to assess how domestic confidence in fiscal management is evolving.
The next auction results, which will be published after the August 7, 2025 settlement date, will offer a clearer picture of investor sentiment and could influence future interest rate trends and government borrowing costs.
