Uganda’s central bank gets $339m in rare private debt placement

AFRICAN BUSINESS AND ECONOMYFebruary 11, 2024 at 1:21 PM UTC

TLDR

Uganda's central bank raised 1.3 trillion shillings ($339 million) in a rare private placement Treasury bond auction.
This was the first private placement bond auction since June 2022 and differed from the monthly government bond sales through open auctions.
The auction featured three-year, five-year, 10-year, 15-year, and 20-year Treasury bonds, with bids totaling 2.3 trillion shillings. Bonds are set to mature between 2026 and 2043.

Uganda's central bank conducted a rare private placement Treasury bond auction, raising 1.3 trillion shillings ($339 million), slightly below the targeted 1.5 trillion shillings. Results from Thursday's auction revealed the outcome. This marked the first private placement bond auction since June 2022.

Traditionally, the bank conducts monthly government bond sales through open auctions. However, starting in 2020, it introduced private placements, inviting specific banks to participate rather than using the customary open auctions.

The auction featured three-year, five-year, 10-year, 15-year, and 20-year Treasury bonds. Remarkably, the central bank received bids totaling 2.3 trillion shillings. These debt notes are set to mature at various dates between 2026 and 2043.

Key Takeaways

According to the finance ministry, Uganda's public debt stock is projected to reach 49.2% of gross domestic product (GDP) by the end of the current fiscal year, rising from 46.9% recorded a year earlier. This increase is primarily attributed to government expenditure on public infrastructure projects. Notably, the escalating debt levels have prompted concerns, with the central bank warning that debt servicing costs are increasingly overshadowing key sectors such as education and healthcare. The country's external debt obligations have surged by 16% in the current fiscal year. To meet repayment commitments, Uganda is relying on inflows for budgetary support, revenue from the oil industry, and a resurgence in portfolio investment. Central bank data indicates that external debt service for this year amounts to approximately $990 million, compared to $857 million in the previous fiscal year.

Uganda

Debt

Bond

Economy