15 August 2016

Govt securities attract more foreign investors


High interest charged in government securities has continued to see many offshore investors actively participating in Uganda’s debt market thus helping government to raise funds for fiscal operations.

The active participation of the offshore investors has also contributed to the growth of a secondary market for treasury bills and bonds.

Director of financial markets at Bank of Uganda (BoU), Mr Stephen Mulema, said on Monday that foreign investors are presently active in the market holding up to the tune of Shs1.2 trillion in government securities which constitutes slightly more than 10 per cent of the total government securities in the market.

“The offshore investors are active in the short term securities treasury bills and long term securities treasury bonds,” he said.
The rate charged on treasury bills of 91 days is at 15.64, treasury bills 182 days 16 per cent, treasury bills of 364 days17.33 per cent. Treasury bonds of two years attract interest rate of 15.86 per cent, five years 17.50 per cent, 10 years 17.22 per cent and 15 years 17.50 per cent.

BoU issues treasury bills and bonds on the behalf government as planned in the budget of a particular financial year.
All the government securities being issued by the BoU are all for fiscal operations of the ministry of Finance, Planning and Economic Development.

Mr Mulema said the total volume of government securities in the secondary market is Shs11 trillion. And in this current fiscal year 2016/17, government has planned to issue treasury bills and bonds worth Shs612 billion.

BoU says after a steady downward trend since January 2016, yields on Treasury bill rates rose in June and July 2016, while yields on Treasury bonds registered declines, and that under subscriptions at the shorter-end were recorded in June 2016 and more appetite noted for the 364-day Treasury bill and Treasury bonds.



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