(JUBA) – The Bank of South Sudan (BOSS) conducted its eighteenth Term Deposit Facility (TDF) auction on August 27, 2025, aiming to absorb liquidity from the domestic market. The auction, announced two days prior by BOSS, attracted significant interest from commercial banks despite offering a total of 20 billion SSP (approximately $4.35 million).
The TDF auction received a total bid volume of 104 billion SSP (around $22.61 million), resulting in a bid-to-cover ratio of 5.2, reflecting high demand compared to the offered amount. Out of 11 submitted bids, only three were successful, with six banks participating in the auction.
The weighted average interest rate for successful bids stood at 2.03 percent, while the highest bid rate received was 12.8 percent and the lowest 0.85 percent. The facility aims to manage excess liquidity in the banking system, with interest and principal payable at maturity.
BOSS structured the auction across three tenors, allocating 10 billion SSP ($2.17 million) for a 28-day term, 6 billion SSP ($1.3 million) for an 84-day term, and 4 billion SSP ($0.87 million) for a 336-day term. Maturity dates are scheduled for September 24, 2025, November 19, 2025, and July 29, 2026, respectively.
Banks were required to submit bids via e-mail or the Refinitiv platform between 9:00 AM and 10:00 AM, with adjudication completed by 11:00 AM on the same day. Banks lacking access to Refinitiv had to authenticate and submit their bids in a single PDF file. Early termination of deposits carries a penalty of 25 percent of accrued interest, and the ceiling rate was set below the Central Bank rate of 13 percent.
Grace Araba Gordon, Director of the Financial Markets Department, confirmed that the auction successfully absorbed the offered 20 billion SSP from the banking system, effectively supporting the continued role of TDF instruments in liquidity management in South Sudan.
TDF Auction Summary Table (August 27, 2025)
| Indicator | Value (SSP) | Value (USD) |
|---|---|---|
| Total Public Offering | 20,000,000,000 | 4,347,826 |
| Total Bid Volume | 104,000,000,000 | 22,608,695 |
| Bid-to-Cover Ratio | 5.2 | – |
| Number of Bids Submitted | 11 | – |
| Successful Bids | 3 | – |
| Unsuccessful Bids | 8 | – |
| Number of Bank Participants | 6 | – |
| Weighted Average Rate | 2.03% | – |
| Highest Bid Rate | 12.8% | – |
| Lowest Bid Rate | 0.85% | – |
Detailed Analysis of the TDF Auction Results
1. Demand versus Supply:
The total bid volume of 104 billion SSP (≈ $22.6 million) far exceeded the offered 20 billion SSP (≈ $4.35 million), resulting in a bid-to-cover ratio of 5.2. This indicates very strong demand from commercial banks for short and medium term liquidity absorbing instruments. Such a high ratio suggests that banks are eager to park excess funds safely, likely reflecting concerns over inflation, currency stability, or limited alternative investment opportunities in the market.
2. Interest Rate Environment:
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Weighted average rate for successful bids: 2.03%
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Highest bid rate: 12.8%
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Lowest bid rate: 0.85%
The wide range of bid rates signals divergent risk appetites and liquidity needs among participating banks. Some banks were willing to accept very low returns (0.85%) to secure safe, short term placement, while others demanded higher returns (up to 12.8%) reflecting either liquidity pressures or expectations of higher market rates. The successful allocation at a weighted 2.03% shows that most winning bids were conservative, aligned with the Central Bank’s low risk liquidity absorption strategy.
3. Allocation by Tenor:
| Tenor (Days) | Amount Allocated (SSP) | Amount (USD) |
|---|---|---|
| 28 | 10,000,000,000 | 2,173,913 |
| 84 | 6,000,000,000 | 1,304,348 |
| 336 | 4,000,000,000 | 869,565 |
Short term instruments (28 days) received the largest allocation, showing that banks preferred liquidity flexibility while still earning modest returns. Longer term instruments (336 days) were the least allocated, possibly due to uncertainty in market conditions or expectations of rising rates over the next year.
4. Market Implications:
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The successful absorption of 20 billion SSP helps stabilise liquidity, preventing excessive money supply that could drive inflation.
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The strong oversubscription indicates healthy banking sector participation, which can support government and central bank debt management strategies.
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Banks are actively managing liquidity with a mix of short and medium term instruments, suggesting cautious optimism about the stability of the financial market.
5. Risks and Considerations:
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The early termination penalty (25% of accrued interest) discourages premature withdrawal, maintaining stability in the central bank’s liquidity control.
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With only three out of eleven bids successful, some banks may face liquidity placement pressures, especially if market conditions change unexpectedly.
6. Overall Interpretation:
The auction reflects a well functioning short term money market in South Sudan. High demand, conservative average rates, and careful tenor allocation show that banks are balancing the need for safe investment against earning opportunities. For policymakers, the results signal that TDF auctions are an effective tool to manage excess liquidity, and they provide insight into banking sector sentiment regarding interest rates, risk, and liquidity preferences.
