Treasury Bills/ Bonds Dealership Services
Centenary Bank is a registered Primary Dealer for Treasury bills/bonds. It transacts directly with Bank of Uganda on behalf of its customers and the investing public.
What are Treasury Bills/Bonds?
Treasury bills are risk-free short term debt instruments regularly issued by Government through Bank of Uganda to the public. Treasury bills are usually issued with maturities of 91days, 182 days and 364days. Treasury bonds on the other hand are long term debt instruments also issued by the Government through Bank of Uganda to the investing public. Treasury Bonds are issued with maturities of 2, 3, 5and 10 years.
In what denominations are Treasury bills/bonds Issued?
Treasury Bills/Bonds are issued in multiples of UShs. 100,000/= starting with a minimum of UShs 100,000/=
Who can invest in Treasury bills?
Any member of the public, with or without a Centenary Bank account is eligible to invest in Treasury bills through Centenary Bank.
What must I do to invest in Treasury bills/bonds?
In order to invest in Treasury bills, you need to do the following:
What are Treasury Bills/Bonds?
Open up a Treasury bills account on the Central Depository System (CDS) through Centenary Bank.
Bank of Uganda as agent to Government maintains records of Treasury bills on a computer register called a Central Depository System (CSD) which generates statements of the investors’ holdings. The CDS account is opened by completing, signing and submitting a CDS Form 1and the CDS Dealing Agreement to Centenary Bank who will in turn submit them to Bank of Uganda on your behalf before the auction day. Normally the account is opened once and will be used for all the subsequent auctions.
Look out for the Bank of Uganda adverts in the print media regarding the fourth coming Treasury Bills/Bonds auctions. Bank of Uganda normally notifies the general public through the major print media, the Daily Monitor and the New Vision about the fourth coming auction of treasury bills detailing the invitation for applications for Uganda Treasury Bills/Bonds, the offer amount, maturity days, auction dates, settlement dates and the minimum competitive & non-competitive
Complete the bid application form (CDS Form 2) with the of Centenary Bank’s Treasury Department staff. Centenary Bank will submit your bid application form to Bank of Uganda before the auction day.
Deposit the cash for payment of the Treasury bill/bond instrument in your Centenary Bank account. Once the amount has been deposited, Centenary Bank as a registered Primary. Dealer will on your behalf participate in the auction and once the bid is successful, Centenary Bank will automatically debit your Bank account with the cost of the bid.
Collect your Investment Certificate and the CDS account statement/advices issued by Bank of Uganda once Centenary Bank has participated in the Treasury bills/bonds auction on your behalf.
You have to wait for a notification from Centenary Bank requesting you to collect your Investment Certificate and your CDS account statement issued by Bank of Uganda in your favor to acknowledge your payment, alternatively you can also check with Centenary Bank as soon as the results of the Treasury Bills auction are announced in press (print media) by Bank of Uganda with the following details: Issue date, Value of bids, Price range, Maturity dates, auction date & number, time & settlement date.
What is the cost of my bid?
The cost of the bid is computed is computed using the formulae:
Cost of bid = Maturity value X price/100
For example: The cost of the bid for a maturity value of UShs. 11million priced at 98.55for every UShs. 100 in Treasury bills is calculated as follows:
Cost of bid = 11,000,000X98.55/100 = 10,840,500
How much interest will I earn on my bid?
The amount of interest you will earn depends on the price you pay for your Treasury bill. The lower the price you pay, the high the interest you will earn. The interest amount you will earn is computed using the formulae:
Interest earned = Maturity value – Cost of bid
In our example above, the interest you earn on your bid is:
Interest earned = 11,000,000 – 10,840,500 = 159,500; however the 159,500 is subject to a 15% Withholding tax so the net interest earned is 135,575.
How much can I invest in Treasury Bills/ Bonds?
The amount you invest will entirely depend on your source of income. One can invest as low as UShs. 100,000 which is equivalent to the minimum investment price.
How can I tell that a bid for Treasury bill will be Competitive or Non – competitive?
The commitment to buy a Treasury bill value is above UShs 10,100,000 is regarded as a Competitive bid. Competitive bids determine the average auction price of treasury bills. On the other hand commitment to buy a Treasury bill whose value is below UShs 10,100,000 is regarded as a Non - competitive bid and in this case the investor becomes a Price taker. The average auction price is therefore determined
by the Price Makers.
Can I sell my Treasury bills?
You can exchanged/transfer or sell your Treasury bill holdings to another treasury bills investor through Primary Dealer (s).
When do I check my Centenary Bank account to ascertain whether the interest earned has been credited?
Two days upon maturity of the Treasury Bills/ Bonds, provided Bank of Uganda has credited Centenary Bank, your Bank account will be credited with the face value of the Treasury bill/bond, as indicated on the Investment Certificate.
Who in Centenary Bank can guide me on investing in Treasury Bills?
Any staff at Centenary Bank can educate you on Treasury Bills/Bonds investment, interest calculation, maturity dates, taxation and the cost of the bid. By telephone you can call 0414– 341375/235220 for any further assistance during working hours. Visit your nearest Centenary Bank branch today for more information on how to invest.