Central Bank of Kenya(CBK) collected KSh 85.3 billion out of its first Treasury Bonds Auction this October, whose purpose is to raise cash for Budgetary support.
Out of the KSh 50 billion worth two long-term Treasury Bonds sold this week, CBK received bids worth KSh 118.8 billion out of KSh 50 billion offered. The state fiscal agent accepted KSh 85.3 billion, bringing up its total Domestic Borrowings for Budgetary support, through the Government Securities Market to KSh 287.2 billion.
This is as Banks, Pension Firms, Insurance Companies and Money Market Funds, dominant holders of Government Debt instruments, as well as foreign investors park their idle funds in these lucrative and relatively risk-free debt instruments.
“Banks are seeing a decline in loan demand due to uncertainty around the new loaning model while the returns from the local T-bonds is also attracting foreign investors interest given that they offer higher returns compared to US Treasury Securities,” said CFA Dedan Mwangi.
He added that with Inflation relatively stable, Investors view returns from Government paper as excellent in real terms compared to a volatile stock market and other options.
With new Treasury Bond Issues coinciding with maturing ones, investors with maturing binds or T-Bills could also be re-investing into the new issuances.
At this week’s CBK T-Bills Auction, the sale registered a 237.8% oversubscription with the 20-year re-opened T-Bond being the most attractive. The tenor received bids worth KSh 73.9 billion against KSh 44.9 billion for the 15-Yr re-opened Treasury Bond.
CBK is offering a return of 13.4% on the 20-Yr T- Bond while the 15-Yr bond has a coupon rate of 12.65%.
CBK accepted KSh 85.3 billion at this auction, made up of KSh 31.5 billion for the 15-yr Bonds and KSh 53.7 billion from the sale of the 20yr Bond.
CBK T-Bond Auctions Since June 2025
Available Data from the Central Bank shows that the Government fiscal agent conducted the first T-Bonds Auction, after the 2025/26 budget on June 18th 2025, seeking for KSh 50 billion for Budgetary support. The CBK received bids worth KSh 101.4 billion at this auction and accepted KSh 71.6 billion.
At the next T Bonds Auction in July, CBK floated T-Bonds worth KSh 50 billion and received bids worth KSh 76.9 billion and accepted KSh 66.7 Billion.
In the month of August, Central Ban of Kenya sought KSh 90 billion to fund infrastructure projects through issuance of 15yr and 19yr reopened infrastructure bonds, receiving bids worth KSh 323.4 billion and accepting KSh 95 billion.
It went in for the second time this month with two similar infrastructure bonds, seeking for another KSh 50 billion and received bids worth KSh 207.5 billion and accepted KSh 179.8 billion.
In September, CBK came in again for budgetary support funds with three long term re-opened T-Bonds, seeking two tranches of KSh 40 billion and KSh 20 billion, totalling KSh 60 billion, offering investors a coupon rate of 13.2% and 14.2% for the two 20 and 25-year T-bonds.
CBK accepted KSh 61.4 billion in the first auction and KSh 2.4 billion in the re-opened 30Yr re-opened Treasury Bond that was undersubscribed at 40.3% as investors reacted to the relatively low coupon rate of 12%.
In total, Central Bank of Kenya has so far raised KSh 287.2 billion through T-Bond Auctions since June 2025, to raise cash from the domestic money market to finance its the Government’s budget deficit.
Kenya’s budget deficit for the 2025/26 financial year, including grants, is projected at KSh 923.2 billion, down from KSh 997.5 billion in FY 2024/25.
The Kenya Kwanza administration has planned to bridge this financing gap through external borrowing of KSh 287.7 billion and Domestic borrowing of KSh 635.5 billion.
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