The African Development Bank (AfDB) plans to sell a 10-year, 12.5 billion Ugandan shilling ($5 million) bond this week, the first issue from its new 125 billion shilling issuance programme, a bank official said on Monday. Regulators have given the go-ahead to the medium-term note programme, whose timeframe has not been decided, said Olivier Eweck, manager of African currencies' funding at the AfDB.
It will allow the bank to issue bonds in multiple tranches to fund infrastructure and other projects in the east African nation. The first tranche will be open for subscription from July 17 to July 20. The coupon will be 85 percent of the yield on Uganda's benchmark two-year government bond. The Bank of Uganda is scheduled to auction 100 billion shillings of two-year bonds on Wednesday. The same issue yielded 15.16 percent when it was last sold in May.
African Alliance Uganda has been appointed sponsoring broker for the note programme but investors can place an order via any broker on Uganda's Securities Exchange, Eweck told Reuters. A second tranche of the triple-A-rated AfDB's bond will be issued before the end of 2012, he added, and is likely to be the same size as the first. Foreign interest in Ugandan debt grew late last year as soaring inflation pushed Treasury bill and bond yields to record highs, but interest has since waned as yields have declined. Year-on-year inflation slowed to 18 percent in June from 18.6 percent in May.
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