CBK (Central Bank of Kenya) has launched one of its largest Treasury Bonds offer ye, seeking KSh 150 billion through sale of three tax free infrastructure bonds, cash that is needed to fund several infrastructure projects listed in the 2026/27 budget.
CBK offer to investors
According to the CBK prospectus, the re-opened 16-year infrastructure bond, which matures on October 8th 2035 has a coupon rate of 11.75%. The second re-opened infrastructure bond, which was first sold in 2021, matures on 21st March 2039 and has a coupon rate of 12.667%. The third re-opened infrastructure bond, which has a coupon rate of 12.737% and matures on 18th August 2042.
The bids deadline and auction date is 12th August 2026 with settlement date of 17th August 2026 for all successful bidders.
According to a Parliamentary Committee Report of Budget and Appropriations on Budget 2026/27 Estimates, CBK is expected to float a bond to KSh 120 billion.
National Treasury Cabinet Secretary John Mbadi, said the state will push for use of public private partnerships and alternative funding to bridge a KSh 647 billion annual gap.
The 2026/27 budget has allocated KSh 220.4 billion to Roads, broken down into KSh 118.1 billion for road maintenance, KSh 58 billion for rehabilitation works, KSh 44.3 billion for construction of new roads and bridges.
The Railways sector has an allocation for KSh 38.4 billion for extension of the Naivasha-Kisumu-Malaba rail with KSh 20.8 billion set aside for SGR extension to Malaba. KSh 616m is for purchase of 500 SGR flat wagons plus 20 passenger coaches and KSh 2.76 billion for locomotive wheel sets. The Nairobi Railway City project is projected to gobble KSh 436 million while KSh 726m is for rehabilitation of the old metre-gauge railway from Longonot to Malaba, KSh 1.39 billion for Nairobi-Nanyuki line and Kisumu-Butere line.
The Energy sector has been allocated KSh 30.9 billion for expansion of electricity through rural electrification, national grid development and alternative energy technologies.
National Treasury has allocated KSh 8.6 billion for Kenya Digital Economy acceleration project, fibre optic expansion and Konza smart city.
CBK has also floated a bond switch auction, asking holders to the 91-day, 182-day and one year treasury bills, all which mature on September 7th 2026 as well as a 15 year Treasury Bond which matures on 6thSeptember 2027 to a 10 year Treasury Bond, which matures on 12th November 2029. This bond has 3.23 years to maturity, a higher coupon rate of 12.2800%.The bond switch auction intends to raise KSh 15 billion, according to CBK prospectus.
The sale period for the Bond Switch auction is from July 30th to August 24th 2026 with the auction date of 24th August 2026.
At the last primary bond auction, the CBK announced KSh 40Bn domestic borrowing program for July 2026 to participate in two re-opened papers, the 20-year and 25-year treasury bond. The bond auction demonstrated continued market confidence in medium- to long-term government paper, anchored by stabilizing inflation expectations.
Investors were aggressive with total bids reaching KSh 85.93 billion relative to the KSh 40.00 billion target—a 214.82% subscription rate.
Investors heavily favoured the longer end of the yield curve, directing 72.11% of all bids to the 25-year paper to secure its attractive coupon rate.
Despite the heavy oversubscription, the exchequer prioritized price discipline over volume, accepting KSh 63.28 billion (KSh 12.25 billion for the 20-year bond and KSh 51.03 billion for the 25-year bond
According to a weekly report on fixed income market by Standard Investment Bank(SIB), this selective allotment was enabled by recent multilateral inflows—comprising KSh 43.8 billion from the African Development Bank (AfDB) and KSh 161.8 billion from the World Bank—which strengthened the government’s cash position and reduced reliance on high-cost domestic borrowing.
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