Treasury Bills and Treasury Bonds are both government securities issued by the Government of Uganda through the Bank of Uganda.
The main difference is how long you invest and how you earn your return.
Treasury Bills are short-term securities that mature within one year and are generally purchased at a discount.
Treasury Bonds are longer-term securities that generally pay coupon interest every six months and return the face value at maturity.
Understanding these differences can help you decide which type of government security better matches your investment period, income needs and financial goals.
What Are Treasury Bills?
Treasury Bills, commonly called T-Bills, are short-term Government of Uganda securities.
They are issued with three maturity periods:
- 91 days
- 182 days
- 364 days
Treasury Bills do not pay coupon interest.
Instead, they are generally purchased for less than their face value. At maturity, the investor receives the full face value.
For example, suppose a Treasury Bill with a face value of UGX 1,000,000 is purchased for UGX 900,000.
At maturity, the investor receives UGX 1,000,000.
The UGX 100,000 difference represents the gross return before applicable taxes.
The actual purchase price and yield depend on the prevailing Treasury Bill auction or market conditions.
You can see the latest figures on Treasury Bill Rates in Uganda.
What Are Treasury Bonds?
Treasury Bonds are longer-term Government of Uganda securities.
Unlike Treasury Bills, Treasury Bonds generally pay coupon interest every six months.
The investor also receives the bond’s face value when it matures, subject to the applicable terms.
Government of Uganda Treasury Bonds can have maturities extending several years into the future.
This makes them different from Treasury Bills, which mature within one year.
Treasury Bonds can also be bought and sold on the secondary market before maturity, although the market price may be above or below the bond’s face value.
Through Level Africa, investors can access available Government of Uganda Treasury Bonds digitally.
Treasury Bills vs Treasury Bonds: Key Differences
| Feature | Treasury Bills | Treasury Bonds |
|---|---|---|
| Issuer | Government of Uganda | Government of Uganda |
| Issued through | Bank of Uganda | Bank of Uganda |
| Investment period | 91, 182 or 364 days | Longer-term |
| Interest payments | No coupon | Generally every six months |
| How returns are earned | Bought at a discount and redeemed at face value | Coupon payments plus potential price effects |
| Maturity | Within one year | More than one year |
| Secondary market | May be tradable | May be traded before maturity |
| Price risk before maturity | Possible | Possible |
| Typical use | Shorter-term investment period | Longer-term income and investment goals |
| Available through Level Africa | No | Yes |
How Do Returns Differ?
The biggest structural difference is how the investor earns a return.
Treasury Bill Returns
Treasury Bills are discount securities.
You purchase the security below its face value and receive the face value when it matures.
The difference represents your gross investment return.
For example:
Face value: UGX 1,000,000
Purchase price: UGX 900,000
Amount received at maturity: UGX 1,000,000
Gross difference: UGX 100,000
The actual return depends on the price at which the Treasury Bill is purchased.
Treasury Bond Returns
Treasury Bonds generally provide coupon payments every six months.
For example, a bond with:
Face value: UGX 1,000,000
Coupon rate: 15%
would generate:
UGX 150,000 in annual coupon interest
or approximately:
UGX 75,000 every six months before applicable taxes.
However, the coupon rate should not be confused with the bond’s yield.
If you buy a Treasury Bond above or below its face value, your effective return can differ from its coupon rate.
Coupon Rate vs Yield
This is particularly important when comparing Treasury Bonds.
The coupon rate determines the interest payments attached to the bond.
The yield reflects the return implied by factors including the bond’s market price, coupon payments and time remaining until maturity.
For example, a bond may have a 15% coupon but trade at a price that produces a different yield.
When comparing available Treasury Bonds, looking only at the coupon rate can therefore be misleading.
You can compare current and historical yields on Treasury Bond Rates in Uganda
Which Is Better for Short-Term Investing?
Treasury Bills are specifically designed as short-term government securities.
Their maturities of 91, 182 and 364 days make them suitable for investors looking for government securities that mature within approximately three months to one year.
For example, an investor who knows they will need money in six months may consider whether a Treasury Bill maturity aligns with that timeline.
Treasury Bonds generally have much longer maturities.
However, Treasury Bonds can potentially be sold before maturity through the secondary market.
That does not make a long-term bond equivalent to a short-term Treasury Bill because the price received when selling a bond early depends on prevailing market conditions.
Which Provides Regular Income?
Treasury Bonds have the advantage if your objective is periodic income.
Government of Uganda Treasury Bonds generally pay coupon interest every six months.
Treasury Bills do not make periodic coupon payments.
The Treasury Bill return is realised through the difference between the purchase price and the amount received at maturity.
For investors looking for periodic investment income rather than simply receiving their return at maturity, Treasury Bonds therefore have a different structure.
Which Has More Interest-Rate Risk?
Both Treasury Bills and Treasury Bonds can be affected by changes in market interest rates.
However, longer-term bonds generally have greater price sensitivity to changes in interest rates than short-term securities.
If market yields rise, the market price of an existing bond may fall.
If yields fall, an existing bond may become more valuable in the secondary market.
This matters particularly if you intend to sell a Treasury Bond before maturity.
An investor holding a bond until maturity is in a different position from an investor who may need to sell it early.
Are Treasury Bills and Treasury Bonds Safe?
Both are obligations of the Government of Uganda and are generally considered to have relatively low credit risk compared with many private-sector investments.
However, describing either investment as completely risk-free can be misleading.
Investors should still consider factors such as:
- Inflation
- Interest-rate movements
- Reinvestment risk
- Liquidity
- Taxation
- The possibility of selling before maturity
- The length of time their money is invested
The fact that both are government securities does not mean they behave identically.
Which Has Better Returns?
Neither Treasury Bills nor Treasury Bonds permanently offers the higher return.
Yields change with market conditions.
Treasury Bill rates change from auction to auction.
Treasury Bond yields also change through auctions and secondary-market trading.
Longer maturities may sometimes offer higher yields to compensate investors for committing money for longer periods and taking greater interest-rate risk, but this is not guaranteed.
Instead of assuming that bonds always pay more, compare the current yields available when you are ready to invest.
Can You Invest in Both?
Yes.
Treasury Bills and Treasury Bonds can serve different purposes within the same financial plan.
For example, an investor might use shorter-term government securities for money needed relatively soon while using Treasury Bonds for longer-term investment goals or periodic income.
The decision does not necessarily have to be one or the other.
Treasury Bills vs Treasury Bonds: Which Should You Choose?
Consider Treasury Bills if you:
- Specifically want a short-term Government of Uganda security
- Have an investment period of 91, 182 or 364 days
- Prefer receiving the investment return at maturity rather than periodic coupons
- Understand how Treasury Bill discount pricing works
Consider Treasury Bonds if you:
- Have a longer investment horizon
- Want coupon payments generally made every six months
- Want access to longer-dated Government of Uganda securities
- Understand that bond prices can change before maturity
- Want the possibility of accessing bonds through the secondary market
The better option depends on what you need the money to do.
Important: Treasury Bills Are Not Currently Available Through Level Africa
Treasury Bills are not currently available for investment through Level Africa.
If you were considering Treasury Bills because you specifically want exposure to Government of Uganda securities, you can explore Treasury Bonds available through Level Africa.
If your priority is a shorter-term investment or easier access to your money, you can compare Unit Trusts, including Money Market Funds where applicable.
Level Africa also provides Fixed Income opportunities for investors looking for other income-focused investments.
How to Invest in Treasury Bonds Through Level Africa
Treasury Bonds available through Level Africa can be accessed digitally.
1. Create & Verify
Create your Level Africa account and complete verification.
2. Fund Your Wallet
Add money to your Level Africa wallet.
3. Choose a Treasury Bond
Review the bonds currently available and compare factors such as maturity, coupon, yield and investment period.
4. Invest & Track
Complete your investment and track it through your Level Africa account.
Final Thoughts
Treasury Bills and Treasury Bonds are both Government of Uganda securities, but they serve different investment needs.
Treasury Bills are short-term, maturing after 91, 182 or 364 days and generating returns through discount pricing.
Treasury Bonds are longer-term, generally paying coupon interest every six months and providing investors with access to longer investment periods.
Neither is automatically better.
The right choice depends on your investment period, income needs, liquidity requirements and what you want your money to achieve.
Frequently Asked Questions
What is the main difference between Treasury Bills and Treasury Bonds?
Treasury Bills are short-term government securities with maturities of 91, 182 or 364 days and are generally purchased at a discount. Treasury Bonds are longer-term government securities that generally pay coupon interest every six months.
Do Treasury Bills pay interest every six months?
No. Treasury Bills do not pay coupon interest. Their return comes from the difference between the purchase price and the face value received at maturity.
Do Treasury Bonds pay interest?
Yes. Government of Uganda Treasury Bonds generally pay coupon interest every six months.
Which is better, Treasury Bills or Treasury Bonds?
Neither is universally better. Treasury Bills may better suit shorter investment periods, while Treasury Bonds can suit longer investment horizons and investors looking for periodic coupon income.
Which pays more, Treasury Bills or Treasury Bonds?
It depends on prevailing market yields. Treasury Bonds do not always offer higher yields than Treasury Bills.
Can Treasury Bonds be sold before maturity?
Yes, Treasury Bonds may be traded on the secondary market. The price received can be higher or lower than the bond’s face value depending on market conditions.
Can I invest in Treasury Bills through Level Africa?
No. Treasury Bills are not currently available for investment through Level Africa.
Can I invest in Treasury Bonds through Level Africa?
Yes. Investors can explore available Government of Uganda Treasury Bonds and invest digitally through Level Africa.