CBK (Central Bank of Kenya) has invited bidders for a switch bond auction that will holders of a 10-year bond, first sold in 2017 that has 1.2 years to mature to a 20 year bond that will take 15.22 years to mature.
CBK is offering a coupon rate of 13.4440% for the destination 20-year bond compared to the 12.9660% for the 10-year source bond, which matures in July 19th 2027. The 20-year Treasury bond matures in July 22, 2041.
The period of sale, according to the CBK prospectus is from April 23rd to May 18th 2026, with the auction date of May 18th 2026.
CBK Previous Bond Switch Auctions
In the last switch bond auction, CBK received bids worth ksh2.56 Bn, against a target of KSh 20 Bn, an Undersubscription of 12.8%.
This is as holders of the KSh 20 billion 10-year debt instrument the switch bond switch, the 5th this fiscal year auction, a wide berth.
CBK invited investors to switch the 10-year bond due in August 2026 to a 15-year one due on 9th May 2033.
CBK accepted bids worth KSh 1.75 billion, with an amount of KSh 1.76 billion switched from the 10-year to the 15-year T-Bond.
The 10-year paper is nearing the end of its life cycle, with only 0.3 years remaining to maturity. Holders of this instrument remained put with eyes on the higher coupon rate of 15.0390% compared to the 15- year instrument which carries a coupon rate of 12.65%.
The fifteen-year paper offered investors a significantly longer horizon, with 7.1 years remaining to maturity. It carried a coupon rate of 12.6500% and matures on May 9, 2033. The destination bond attracted an accrued interest of KSh 5.1782 per KSh 100.
In 2026, the CBK has undertaken two Switch Bond Auctions, with the January one targeting the same source bond drew KSh 26.49 Bn in bids and accepted KSh 25.17 billion against the KSh 20 Bn offer, a 132% performance.
In the March Switch Bond Auction, which converted a 5-year T-Bond into a 15-year T-Bond, attracted bids worth KSh 22.21Bn against KSh 15 Bn target with the CBK accepting KSh 18.4 Bn. CBK has been conducting switch bond auctions as a critical component of Kenya’s broader Medium-Term Debt Management Strategy (MTDS), which prioritizes reducing refinancing risks.
By lengthening the average time to maturity of the domestic debt portfolio, the CBK effectively defers significant repayment obligations. This strategy is designed to minimize the costs of debt and reduce the immediate debt burden, which the government aims to lower from 5.4% of GDP to 4.6% by 2028.
CBK is also seeking KSh 80 Billion for budgetary support from the auction of two 20-year treasury bonds and a 25-year treasury bond which has 20.1 years to maturity.
The period of sale is between 23rd April and 6th May 2026 with the auction date of May 6th 2026.
The coupon rates for the three bonds are 12%, 12,8730% for the 20 year bonds and 13.9240 for the 25 year Treasury Bond which matures on 9th April 2046.
Secondary Trading Secondary trading in multiples of KES 50,000.00 commence on Monday, 11/05/2026 for FXD1/2012/020, FXD1/2019/020 and FXD1/2021/025.
The Central Bank will rediscount bonds as a last resort, at 3% above the prevailing market yield or coupon rate whichever is higher. Rediscount instructions should be sent from the CBK DhowCSD investor portal/App under the Instructions tab, select Create new and the Rediscount option.
The Bonds may be re-opened at a future date. The bonds qualify for statutory liquidity ratio requirements for Commercial Banks and Non-Bank financial institutions as stipulated in the Banking Act CAP 488 of the laws of Kenya.
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