Value of govt bonds increase by Shs5.8 trillion

The Capital Markets Authority (CMA) has revealed that the value  of  government  bonds  traded  on  the  secondary  market  significantly  increased  in  the  second  quarter  of  2023,  reaching  Shs15.3  trillion  from  Shs9.5 trillion in the previous quarter ended March. 

The increase was due to a rise in the appetite for safer investments, amid rising volatilities in the equity markets.  

The CMA Quarterly Bulletin noted that average monthly turnover also grew to Shs5.1 trillion compared to Shs3.2 trillion in the previous quarter.   

“Government bond turnover ratio for the first quarter of 2023 rose to 53 percent from 35 percent … due to, among other things, increased investor appetite for government securities,” the report reads in part.   

However, CMA noted that on an  annualized  basis,  government  bonds  turnover  on  the  secondary  market  experienced  a  decline  of  5.1 percent  during  the  review  period,  amounting  to  Shs15.3  trillion compared to Shs16.2 trillion in the second quarter of 2022.  

The report also indicated that during the second quarter of 2023, Bank of Uganda issued a total of Shs2.4 trillion in treasury bills and bonds, which was 25 percent lower compared to the Shs3.2 trillion raised in the first quarter, resulting from government’s  strategy  to  modify  deficit  financing  by  reducing  domestic  debt  and  opting for more  cost-effective  foreign  currency  financing.

In terms of interest rates, CMA noted that in the primary market, the yields on the 10-year Treasury Bond rose to 15.8 percent during the period, compared to an average of 15.2 percent in the previous quarter ended March 2023.   

The report further noted that yields on the two-year, three-year, five-year, 15-year, and 20-year Treasury bonds had declined compared to the previous quarter, which, the report noted, was consistent with an improvement in the liquidity position of all actors within the government bond market space.   

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