5-Step Guide To Treasury Bill & Bond Investing

If you have been thinking about growing your money safely and steadily, then Treasury Bills (T-Bills) and Treasury Bonds (T-Bonds) should be on your radar. They are some of the safest investment options you can find in Uganda, mainly because they are backed by the government. But how exactly do you get started? Let’s break it down in the simplest way possible.

Treasury Bills (T-Bills)

These are short-term government securities. You lend money to the government for 91, 182, or 364 days. At the end of that period, you get your money back plus interest. The interest is paid upfront meaning when investing, you actually pay less than the face value. For example, when you invest in a 364-day T-Bill worth UGX 1,000,000, you only pay UGX 900,000, and you get the full million at maturity. 

Treasury Bonds (T-Bonds)

These are long-term. They range from 2 years to 25 years and pay interest every six months until the bond matures. This makes them great for investors looking for long-term, stable cash flows.

Why Invest in T-Bills and Bonds?

• They are safe; backed by the government.
• They offer predictable returns and cash flows.
• Interest rates are usually higher than ordinary savings accounts.
• They help you diversify your investments.

Who Can Invest? 

Pretty much anyone! You can invest as an individual, company, SACCO, or investment club.

Minimum investment amount in Uganda
Minimum investment in Uganda is UGX 100,000 for T-Bills and Bonds.

 

Step 1:

Open a Securities Central Depository (SCD) account: This is similar to your “investment bank account” for government securities.

You can open it through: licensed commercial banks that act as an agent/ Primary dealer. Uganda has 7 licensed primary dealers: ABSA, Centenary Bank, Citibank, Equity Bank, Housing Finance Bank, Standard Chartered Bank and Stanbic Bank.

Step 2:

Choose Where to Buy From

You have two options:

Directly from Bank of Uganda (Primary Market) tracked on the annual auction calendar

The auctions are held every two weeks for T-Bills and monthly for Bonds.

You submit your bid through your bank that is appointed a primary dealer.

Through a Commercial Bank or broker (Secondary Market)

They will handle the entire process for you, though some charge a small fee.

 

Step 3:

Place a Bid

This sounds complicated but it’s not. When Bank of Uganda puts forward an auction, you simply write to your bank informing them of the following:

The security you want (e.g., 182-day Bill, 5-year Bond)

The amount you want to invest. This will determine whether it is a competitive or non-competitive bid.  In Uganda, the minimum investment for a non-competitive bid in Treasury Bills and Bonds is UGX 100,000, while the minimum for a competitive bid is UGX 200,100,000. A non-competitive bid means that you don’t set your own interest rate or price. Instead, you automatically get the average accepted rate that Bank of Uganda announces after the auction.

People choose non-competitive bids because they are simple — no calculations needed, you are guaranteed to get the investment as long as you submit correctly. It is also perfect for beginners or casual investors.

For instance, if you invest UGX 1,000,000 in a 364-day T-Bill non-competitively, you’ll get the same interest rate as everyone else who used non-competitive bids—no need to guess rates. On the other hand, with a competitive bid, you determine the interest rate you want.

Bank of Uganda will accept bids from the lowest yields (cheapest for government) to the highest and stop when the total amount they need is fully allocated. If your quoted yield is too high (meaning you are demanding too much interest), your bid might be partially accepted or rejected.

Competitive bids are usually good for experienced investors because they can control the rate they want to earn ie, you might get a better-than-average return. They are also useful for institutional or high-volume investors.

Step 4

Pay for Your Investment. Once your bid is successful, your bank will tell you how much to pay. 

Step 5

Sit Back and Earn. For T-Bills, you get your full amount at maturity while bonds pay interest every six months.

Selling Before Maturity

Treasury Bonds (not Bills) can be sold on the secondary market through your bank. This means you are not locked in if you need your money, but the price may be slightly higher or lower depending on market conditions.