Uganda Sells Half of Longest-Tenure Bonds With Demand Soaring

The Bank of Uganda sold half of the 15-year bonds it offered at an auction yesterday, with the coupon almost matching yields on notes due five years earlier, even as investors sought almost three times the amount for sale.

The coupon on the notes, the East African nation’s longest, was 15.25 percent, the Kampala-based central bank said in an e-mailed statement today. It sold 40.67 billion shillings ($16.1 million) after offering 80 billion shillings.

“The pricing was high and we did not accept all the bids,” Stephen Mulema, director of financial markets at the bank, said by phone. “We consider prices that are close to the yield curve that shows prices from banks. We do not accept yields that are far off the curve.”

Uganda followed larger East African peers Kenya and Tanzania by raising money to invest in roads, railways and energy to support growth, while pushing out debt maturities to add to the confidence of bond buyers that their investments will be recouped. The economy of Africa’s biggest coffee exporter is estimated to expand 5.6 percent this year, faster than the sub-Saharan African average of 5 percent, according to the International Monetary Fund.

“We were quite surprised and disappointed by the rate,” Jose Domingo, head of fixed income at Crested Stocks and Securities Ltd. in Kampala, said by phone. He predicted yields at 18 percent to 20 percent. “It will make the market less attractive” at the next sales of the debt, expected in February and May, he said.

In October, Uganda sold 10-year notes at 15.18 percent. Notes due in April 2023 dropped 40 basis points, or 0.4 percentage point, since November to 14.85 percent today, according to data compiled by Standard Chartered Plc.

The range of yields at the 15-year auction were 14.88 percent to 15.4 percent, according to the Bank of Uganda. Investors sought as much as 226.2 billion shillings of the notes.

To contact the reporter on this story: Fred Ojambo in Kampala at

To contact the editor responsible for this story: Vernon Wessels at

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