{"id":60448,"date":"2023-11-20T07:27:21","date_gmt":"2023-11-20T07:27:21","guid":{"rendered":"https:\/\/www.africa-press.net\/uganda\/?p=60448"},"modified":"2023-11-20T07:19:25","modified_gmt":"2023-11-20T07:19:25","slug":"ugandas-rising-bond-yields-could-shrink-investors-funds","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds","title":{"rendered":"Uganda’s rising bond yields could shrink investor\u2019s funds"},"content":{"rendered":"

Africa-Press – Uganda. <\/strong><\/span>Uganda\u2019s bond market could be a hive of activity this quarter as a result of rising yields stemming from government\u2019s domestic borrowing appetite.<\/b><\/p>\n

The reason behind this, according to the International Monetary Fund (IMF), is the inflationary shock brought on by Russia\u2019s war in Ukraine. This has driven up interest rates globally and forced governments to borrow locally at interest rates that are comparatively higher.<\/p>\n

The government\u2019s continuous battle with growing debt financing costs has not stopped Treasury bonds, the government securities with the longest maturity, from turning into a profitable investment choice for investors\u2014at least for the time being.<\/p>\n

Interest on these securities is paid semi-annually and the principal at maturity.<\/p>\n

The average yields or investor returns on the five-year and 15-year Treasury bonds increased to 15.2 percent and 16.1 percent, respectively, in the quarter to September 2023, according to data from the Capital Markets Authority (CMA), while the yield on the two-year bond stayed unchanged.<\/p>\n

This can be explained by a number of factors, such as the increased investment spurred by unit trusts and pension funds in bonds that hovers around 80 percent of their investments\u2019 pool or more, due to the limited investment options and volatile liquidity on the local exchange.<\/p>\n

For example, in a September survey conducted by CMA, 67 percent of collective investment scheme managers agreed that the limited securities on the local bourse discouraged them from investing a lot in local corporate bonds and equities, which possibly forced them to invest more in bonds.<\/p>\n

There are 18 listed companies on the Uganda Securities Exchange (USE), consisting of 10 local listings and seven cross-listings from the Nairobi Stock Exchange.<\/p>\n

Bank of Uganda (BoU) raised Shs4.3 trillion in Treasury bills and bonds in the third quarter of 2023, a 76.4 percent increase over the Shs2.4 trillion it raised in the second quarter.<\/p>\n

The government\u2019s August 2023 bond swaps and the high interest rates brought on by market perceptions of the government raising its domestic borrowing, as noted by the CMA in its third-quarter analysis, put these bonds at risk of substantial value loss.<\/p>\n

The government decided to exchange a portion of the maturing bond (Shs446.73 billion) for four other bonds with different tenors: three years, 10 years, five years, and 20 years after recognising the refinancing risks associated with the expected bond maturity in the first quarter of 2024.<\/p>\n

This pile of short-term securities could devalue the holdings of many pension funds, unit trusts, and commercial banks, affecting their liquidity and ability to meet their debt obligations, analysts stress.<\/p>\n

When interest rates go up, the value of treasury bonds goes down, which reduces the beholder\u2019s wealth.<\/p>\n

For More News And Analysis About Uganda<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Uganda. Uganda\u2019s bond market could be a hive of activity this quarter as a result of rising yields stemming from government\u2019s domestic borrowing appetite. The reason behind this, according to the International Monetary Fund (IMF), is the inflationary shock brought on by Russia\u2019s war in Ukraine. This has driven up interest rates globally […]<\/p>\n","protected":false},"author":84,"featured_media":60447,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,7,258],"tags":[233,240,234],"class_list":["post-60448","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-head-lines","category-to-homepage","tag-africa-press","tag-africa-press-uganda","tag-uganda"],"yoast_head":"\nUganda's rising bond yields could shrink investor\u2019s funds - Uganda<\/title>\n<meta name=\"description\" content=\"Uganda\u2019s bond market could be a hive of activity this quarter as a result of rising yields stemming from government\u2019s ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Uganda's rising bond yields could shrink investor\u2019s funds\" \/>\n<meta property=\"og:description\" content=\"Uganda\u2019s bond market could be a hive of activity this quarter as a result of rising yields stemming from government\u2019s ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds\" \/>\n<meta property=\"og:site_name\" content=\"Uganda\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2023-11-20T07:27:21+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2023\/11\/sm_1700451971.175157.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Uganda’s rising bond yields could shrink investor\u2019s funds\",\"datePublished\":\"2023-11-20T07:27:21+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds\"},\"wordCount\":456,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2023\/11\/sm_1700451971.175157.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Uganda\",\"uganda\"],\"articleSection\":[\"all news\",\"economy\",\"head lines\",\"to-homepage\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds\",\"url\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/ugandas-rising-bond-yields-could-shrink-investors-funds\",\"name\":\"Uganda's rising bond yields could shrink investor\u2019s funds - 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