Central Bank of Kenya(CBK) received bids worth KSh 26.5 Billion at the recently held Treasury Bonds switch auction. At this sale, investors holding a re-opened 10-year Treasury Bond first sold in 2016 were asked to voluntarily switch it with a longer-term 15-year Treasury Bond, which matures on April 6th 2037. The 15-year treasury bond, according to the Central Bank of Kenya, will take 11.3 years to mature.
Central Bank of Kenya had offered KSh 20 Billion in this bond switch auction and accepted bids worth KSh 25.2 Billion, rejecting the more expensive bids. The central Bank Bond Switch Auction was oversubscribed by 132.46% as investors rushed to lock in the more attractive coupon rate offered of 13.94%, by the state fiscal agent.
In the Central Bank of Kenya Bond Switch Auction, the state fiscal agent was offering a bond switch from a 10-year instrument to the reopened 18-year Bond, first sold in 2022, targeting up to KSh 20.0billion via multi-price auction from 9th December 2025 to 19th January 2026.
Central Bank of Kenya plan for the Bond Switch
This marks the first switch auction in the 2025/26 financial year, which is part of the Kenya Government’s liability management operations that seek to use buybacks and switches to actively manage maturity risk, reduce borrowing costs, and smooth the redemption profile of domestic debt.
In particular, the 10-year Treasury Bond had been earmarked for two liability management operations (October 2025 and January 2026). The offer was on a voluntary basis for investors with holdings in the 10-year instrument as at 19th January 2026
How the Bond Switch will benefit Investors
A weekly fixed income bulletin from Standard Investment Bank(SIB) report had forecast that the switch auction will provide investors the opportunity to extend the duration of their portfolios (especially fund managers who are keen on managing their cashflows), locking in the comparatively attractive 13.942% coupon rate offered by Central Bank of Kenya amid recent rate declines. Furthermore, the switch also helped investors address potential reinvestment risk if yields in the market fall even further, should the paper be held till August 2026.
At last week’s Treasury Bills Auction, demand for Treasury Bills remained robust, with the overall subscription rate easing slightly to 128.4% from 130.3% in the prior week.
The accepted amount was higher than the maturity amount, resulting in a net borrowing of KSh 6.2billion.
In absolute terms, the 364-day paper received the highest demand, garnering 95.0% of the total submitted bids and a subscription rate of 292.8%. The 91-day paper recorded a performance rate of 24.0%, while the 184-day paper recorded a dismal performance rate of 5.8%.
Overall, KES 28.5billion was accepted by the Central Bank of Kenya, with the weighted average rate of accepted bids at 7.70%, 7.80% (flat for the fifth consecutive auction), and 9.20% for the 91-day, 182-day, and 364-day papers, respectively.
At the end of last week, the Kenya Shilling exhibited mixed performance compared to the currencies. In particular, the Kenya Shilling gained ground against the Japanese Yen and Tanzanian Shilling, strengthening by 0.9% and 0.8%, respectively. In addition, the local unit appreciated by 0.4% against the British Pound and Euro. On the other hand, the Kenya shilling remained largely unchanged against the US Dollar, while weakening by 1.2% against the Ugandan Shilling.
Notably, the U.S. Dollar Index strengthened by 0.39% during the week ended 15th January 2026, buoyed by positive data that dampened Fed rate cut expectations, according to a SIB Note.
Meanwhile, diaspora remittances remained resilient, with December 2025 inflows declining by 2.2% to US$ 435.5million from US$ 445.4m in December 2024 (up 12.2% from US$ 388.3million in November 2025). Notably, total remittances came in at US$ 5,036.7million in 2025, up 1.9% from US$ 4,945.2million in 2024.
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