Central Bank of Kenya(CBK) is conducting a Treasury Bond Auction in November where it seeks to repurchase KSh 30 Billion worth of 3-year Treasury Bond that was issued in 2023 and was to mature on May 14th 2026.
The Total Outstanding Debt on this bond, which has a coupon rate of 14.2280%, is KSh 76.5 Billion according to the CBK Prospectus for the November Treasury Bond Buyback Programme.
At the primary auction, only investors holding this 3-year T-Bond as of November 17, 2025, are eligible to participate. Participation in the auction is on a voluntary basis and investors may opt to sell-back part or the entire holding face value in the bond.
This bond buyback program’s period of sale begun October 23, 2025, and ends on November 17th, same as the bid submission deadline and auction date. All successful bidders should obtain details of successful bids from the DhowCSD Investor Portal/App under the transactions tab on Monday, November 17, 2025. Successful bidders will be paid on November 19, 2025, by 10.00 am.
Reasons for this CBK Monetary Policy Action
The most recent CBK Treasury Bonds buyback auction was conducted in February 2025 when the Government repurchased KSh 50 Billion worth of bond maturing in 2025. The buyback targeted three treasury bonds, a three year, 5-year bond and 9-year infrastructure bond, all with a combined outstanding debt amount of KSh 185,05 Billion. These instruments had a coupon rate ranging from 11.667% to 12.5%. Successful bidders received payments on February 19th 2025.
“Kenya faces a significant wall of domestic bond maturities in the near term. Buying back some bonds ahead of their maturity can reduce rollover/refinancing. If the bonds mature around the same time, the government must raise large sums quickly to repay or roll them over, potentially at higher interest rates or less favourable market conditions. A buyback reduces the amount needing refinancing. Also, higher yields on long-term paper make refinancing expensive,” said CFA Dedan Maina.
CBK as the state fiscal agent, is keen to improving the Government’s debt maturity profile. This is by spreading Kenya’s debt over longer maturities so that fewer large lumps are payable in short order thus smoothing debt service obligations over time.
“The reason for these buybacks is mostly to smoothen the maturities next year. This is unlikely as there will be little benefit on the price only,” said Eric Musau Director Research, Standard Investment Bank(SIB).CBK in on another bond buyback program in November when the monthly bond auctions are attracting huge subscriptions.
“The reasons for the huge subscriptions in the primary auctions is that short-term interest rates are low, so investors are chasing yield,” said Musau.
Activity at the Nairobi Securities Exchange(NSE) has been on an upsurge with overall market capitalization now trending beyond the KSh 3 trillion levels.
“Well, shares and fixed income instruments are related. When interest rates are falling, investors start looking at equities to get return,” said Musau.
CBK’s bond buyback is seen as a response Kenya’s previous experience of adverse consequences of confronting a large bullet debt repayment due to a depreciating Kenya Shilling exchange rate.
“Thus a proactive buyback signal to markets that the government is managing its debts, supporting confidence in the currency and debt markets. This can create stability,” said CFA Maina. Certain bonds carry high coupon rates compared to the current market yields, prompting the case for buying them back to reduce interest costs over the long run. If market yields drop, rolling older high coupon bonds can save money.
What a CBK T-Bond Buyback Offer to Investors: To Sell or Hold to Maturity
The CBK bond buyback program provides investors with flexibility, liquidity, and confidence while also helping to manage the government’s debt repayment schedule and maintain market stability. This has largely to the growing interest in Kenya’s capital markets, especially stocks by foreign investors. It is also a signal of future markets stability and possible sustained momentum.
Composition of Public Debt Outstanding in T-Bonds Holding
The Government’s outstanding debt held in Treasury Bonds stands at approximately KSh 4.94 trillion as at January 22nd 2025. This amount represents about 85% of Kenya’s domestic debt, which is mearing KSh 6 trillion. The Government’s debt servicing costs are projected to surpass KSh 1 trillion in interest payments alone during the current 2025/26 fiscal year.
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