CBK reopens long-term bonds to raise Sh40 billion in domestic borrowing drive

The government has moved to raise fresh domestic financing through a reopened sale of long-term Treasury bonds, with the Central Bank of Kenya inviting investors to bid for securities expected to mobilise Sh40 billion to support budgetary needs.

The offer, which targets both institutional and individual investors, features two reopened fixed coupon bonds with maturities stretching into the next two decades.

The instruments will also be listed for trading at the Nairobi Securities Exchange once the auction process is completed, allowing secondary market activity after issuance.

In its prospectus issued on Tuesday, the Central Bank, acting as fiscal agent for the government, set out the structure, timelines, and conditions guiding the sale. The notice stated:

“Central Bank of Kenya, acting in its capacity as fiscal agent for the Republic of Kenya, invites bids for the above bonds whose terms and conditions are as follows.”

The reopened papers include FXD1/2020/015 and FXD1/2018/025, which now have remaining maturities of 8.7 years and 17.1 years respectively. The first bond will mature on February 5, 2035, while the second is set to mature on May 25, 2043, extending investors exposure to long-term government borrowing.

The 15-year paper carries a fixed annual coupon rate of 12.7560 per cent, while the 25-year issue offers 13.4000 per cent. Both instruments attract a 10 per cent withholding tax and are positioned as stable, government-backed investments for those seeking predictable returns over time.

The sale window opened on May 29, 2026, and will close on June 3, 2026, with bids expected by 10:00 am on the closing day. The auction is scheduled for the same day, while settlement will be carried out on June 8, 2026.

CBK noted that participation will be through competitive and non-competitive bidding channels. Competitive bids will range from a minimum of Sh50,000 up to a maximum of Sh50 million per CSD account per tenor, while non-competitive bids will require a minimum entry of Sh2 million.

Successful investors will receive payment instructions through the CBK DhowCSD Investor Portal, with payment keys set to be issued on June 5, 2026. The bank also cautioned that failure to meet payment obligations could lead to sanctions on future participation.

“Defaulters may be suspended from subsequent investment in Government Securities.”

Once issued, the bonds will qualify for inclusion in statutory liquidity ratio requirements for banks and other financial institutions, strengthening their appeal within the financial sector. Trading on the secondary market will begin on June 8, 2026, in multiples of Sh50,000, while rediscounting will be available as a last option at a premium above prevailing market yields.

The Central Bank further indicated that the bonds may be reopened in future auctions depending on government financing needs and prevailing market conditions, a move aimed at maintaining flexibility in domestic debt management.