NAIROBI, Kenya

The Central Bank of Kenya (CBK), acting as the government's fiscal agent, announced on Tuesday, November 11, 2025, that it is seeking to raise Ksh40 billion through the reopening of two fixed-coupon Treasury bonds. The funds are earmarked for general budgetary support as the government continues its strategy of leaning more heavily on the domestic market to finance its fiscal obligations.

The offering consists of two reopened bonds: a 15-year bond (FXD3/2019/015) and a 25-year bond (FXD1/2022/025). The 15-year paper has 8.7 years remaining until maturity and carries a coupon rate of 12.340%. The longer-term 25-year bond has 21.9 years left to maturity and offers a higher coupon rate of 14.188%. Interest income from both bonds is subject to a 10% withholding tax.

The sale period for the bonds commenced on November 11, 2025, with the auction and bid submission deadline set for Wednesday, November 19, 2025, at 10:00 a.m. EAT. Successful bidders are required to make payments by Monday, November 24, 2025, which is also the value date and the day secondary trading of the bonds will begin on the Nairobi Securities Exchange (NSE) in multiples of Ksh50,000.

Investor Appetite and Market Context

This bond auction comes at a time of significant investor appetite for long-term government securities, which offer higher returns compared to short-term Treasury bills. Recent bond auctions in November have been heavily oversubscribed. An auction on November 5 targeting Ksh40 billion received bids worth Ksh92.6 billion, a performance rate of 232.3%, with the CBK accepting Ksh52.8 billion. Similarly, an auction on November 19 saw investors offer a cumulative Ksh115.84 billion for two bonds, with the CBK accepting Ksh54.8 billion. Analysts attribute this strong demand to the attractive long-term returns in an environment of declining interest rates on other fixed-income assets like bank deposits and money market funds.

The CBK has been pursuing an accommodative monetary policy, having cut the Central Bank Rate (CBR) in its last eight meetings since August 2024 to its current level of 9.25 percent as of October 7, 2025. This has led to lower returns on other investment vehicles, pushing investors, including pension funds and retail buyers, towards the higher yields of long-term bonds.

Domestic Borrowing and Public Debt

The Ksh40 billion bond issue is part of the government's aggressive domestic borrowing strategy for the 2025/26 fiscal year. According to the National Treasury's annual borrowing plan, the government intends to borrow Ksh613.5 billion locally, representing 68.1% of its financing needs for the year. This marks a significant shift from the previous year's plan to balance domestic and external borrowing equally. This "front-loading" of domestic borrowing helps secure financing early in the fiscal year, mitigating risks of market volatility and reducing future rollover risks.

This reliance on the domestic market comes against a backdrop of rising public debt. According to a CBK document presented to Parliament, Kenya's public debt stock had escalated to Ksh11.81 trillion by June 30, 2025. More recent data from the World Bank's Kenya Economic Update released on November 24, 2025, places the total public debt at approximately Ksh12 trillion, or 68.7% of Gross Domestic Product (GDP). This is above the 55% debt-to-GDP anchor set by the Public Finance Management Act. The government's strategy aims to reduce this ratio over the medium term through fiscal consolidation.

While the CBK maintains that the public debt remains sustainable, it acknowledges a "high risk of debt distress." The increasing domestic borrowing raises concerns about crowding out the private sector from accessing credit and the rising cost of debt service, which stood at Ksh1.9 trillion for the 2025/26 fiscal year. Domestic interest payments alone surged by 24.7% to Ksh776.3 billion in the 2024/25 fiscal period, consuming a larger share of government revenue.

How to Participate

The CBK is accepting both competitive and non-competitive bids. For non-competitive bids, the minimum investment is Ksh50,000, with a maximum of Ksh50 million per Central Securities Depository (CSD) account for each bond. Competitive bids require a minimum investment of Ksh2 million per CSD account per tenor. Bids must be submitted electronically via the CBK's DhowCSD platform.