Mutebile bemoans slow secondary market as Stanbic is named 2015 Primary Dealer
Central Bank Governor Emmanuel Tumusiime-Mutebile said Stanbic won on the basis of its participation in primary auctions, market making capabilities, pricing and timely market intelligence.
“Ladies and gentlemen, it is with great pleasure that I announce that for the fifth consecutive year, Stanbic Bank Uganda is the Primary Dealer of the Year 2015,” Mutebile said shortly after midday today.
This was the twelfth edition of the award and Mutebile used the occasion to bemoan the slow-paced growth of volumes on the secondary market.
“Secondary market trading continues to increase but falls short of our expectations,” Mutebile said adding that while subscription levels in the primary market were high, there was occasion under-subscription in some tenors and spreads of prices were wide and outside of prevailing quoted market ranges.
The central banker said consultations with market players and other stakeholders would continue with a view to bringing broad based initiatives “that will ensure an attractive, efficient and competitive government securities market.”
Turnover in the secondary market grew 12.5 percent in 2015 to reach UGX 3.6 trillion ($1.047 billion) over 2014 while the ration of Primary Dealer successful bids in 2015 was 61.33 percent relative to the rest of the market.
“While we had some under-subscriptions at the beginning of the financial year, the auction bid-to-cover ratio of Treasury Bills and bonds was 1.21 for calendar 2015 indicating significant demand for government securities” Mutebile said.
Accepting the award, Stanbic Uganda chief executive officer, Patrick Mweheire said it was a significant development for the country that the secondary market had “crossed the one US dollar billion turnover mark,” but there was a need to have longer tenure instruments.
“Uganda’s longest tenor Treasury bond is 15 years, we are keen to see a 20 year bond being issued in Uganda,” Mweheire said.