CBK (Central Bank of Kenya) has published a prospectus inviting bidders to participate in a KSh60 billion September Treasury Bonds Sale. The purpose of the funds is for budgetary support. The two re-opened fixed-coupon 15-year and 30-year Treasury Bonds, have a coupon rate of 12.34% and 12.00% respectively.
The re-opened 15-year debt instrument first sold in 2019, matures on 10th July 2034 while the longer-term 30-year Treasury Bond, first sold in 2011 with 14.4 years remaining, matures on 21st January 2041.
According to the CBK prospectus, bidders have a deadline of September 2nd 2026 to make their submissions with the Auction taking place on the same date. Successful bidders are to make their payments to CBK by September 7th, 2026. The sale period runs from August 27th 2026 to September 2nd 2026.
CBK Switch Bond Auction
The CBK has simultaneously invited investors to KSh10 billion Switch Auction, moving holders of a 15-year Treasury Bond first sold in 2013 and maturing on February 7th 2028, with a coupon rate of 11.25% into a 10-year Bond maturing on November 12th 2029, with a higher coupon rate of 12.28%.
A Switch Bond auction is a liability management tool used by the CBKÂ to ease pressure on its debt repayment obligations. The idea is offer holders of a soon-to-mature paper the opportunity to swap into a longer-dated debt instrument.
The Switch Auction takes place on 7th September 2026 with successful applicants making their payments to CBK on September 9th 2026. The sale period for those investors wishing to shift their holdings is between August 27th, 2026, to September 7th, 2026.
Non-competitive bids are amounts between KSh 50,000 and KSh 50 million while competitive bids amounts are at a minimum KSh 2 million per CSD account per Tenor.
Participation in this switch auction is on a voluntary basis, and investors may opt to switch part or the entire holding (face value) in the bond.
Investors are being persuaded to shift from a bond that matures in 1.4 years, to a 10-year bond that matures in 3.2 years but offers a higher coupon rate.
CBK requires investors with outstanding pledges to cancel them 5 days before the switch Settlement date to be eligible to participate in the switch auction.
CBK undertakes Switch Bond auctions so as to avoid paying a huge lump. The objective is also to avoid crowding out as normal rollover competes with fresh budget borrowing. A switch eliminates that competition with investors keen to benefit from higher coupon rates.
This financial year, CBK has planned 6 switches targeting KSh 555.5 billion. The last switch targeting KSh 15 billion got a 150% subscription worth KSh 22.58 billion worth of bids.
CBK Treasury Bills Auction Results
At this week’s Treasury Bills Auction, the CBK accepted KSh 44.32 billion out of KSh 56.74 billion in bids.
Demand was highest for the 91-day Treasury Bills, which was offering investors a return of 8.7692%, with the state fiscal agent accepting bids worth KSh 23.11 billion, an oversubscription, out of the KSh 8 billion worth of this category of T-Bills offered.
The CBK accepted KSh 15.05 billion from the auction of the 182-day Treasury Bills, giving investors a return of 8.9400% while the 364-day Treasury Bills auction raised KSh 6.16 billion out of the KSh 10 billion on offer, an underperformance, with successful bidders getting a return of 9.0323%.
Out of the funds raised at the weekly auction, CBK directed KSh 18.03 billion in net borrowing to meet the Government’s liquidity requirements.
Kenya’s 2026/27 Budget size is KSh 4.8 trillion, with Treasury tabling a deficit of KSh 1.1 trillion which is equivalent to 5.5% of GDP.
The Government intends to have a deficit financing mix that is heavily reliant on domestic borrowing, projected to hit KSh 1.03 trillion while the external borrowing component is KSh 116.2 billion.
Kenya faces a steep debt service pressure of KSh 2.31 trillion due in 2026/27 fiscal year with interest alone sitting at KSh 1.2 trillion. The Government is expected to increase its expenditure this fiscal year due to the forthcoming 2027 General Elections.
ALSO READ: CBK Raises KSh 63.3 Billion for Budgetary Support at July Treasury Bonds Auction
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