A surge in yields on Uganda’s local-currency debt spurred by the World Bank’s decision to halt new loans in protest at new anti-LGBTQ laws may reverse as global sentiment improves and the government unveils new sources of financing, according to Absa Bank Ltd.
The yield on Ugandan-shilling bonds maturing in 2033 has spiked by more than 100 basis points since the multilateral lender suspended its financing for the country earlier this month. The move sparked concern about budget shortfalls with the government currently relying on external loans from lenders including the International Monetary Fund and World Bank to help underpin its 2023-2024 spending plan.
“The government is also reported to be in talks to secure a syndicated loan from global banks,” he wrote in a research note. “As a last resort, the Treasury may consider issuing a maiden Eurobond.”
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