The Central Bank of Kenya (CBK) has launched a Ksh10 billion voluntary Treasury bond switch auction, allowing investors holding a bond due to mature later this year to exchange it for a longer-term government security.

According to a prospectus released on Friday, June 26, 2026, the switch targets holders of Treasury bond FXD1/2021/005, which matures on November 9, 2026.

Investors will be able to exchange their holdings for Treasury bond FXD1/2012/020, which matures on November 1, 2032.

The source bond carries a coupon rate of 11.277 per cent, while the destination bond offers a 12 per cent coupon. The auction opened on June 26 and will close on July 13, with settlement scheduled for July 15.

“All successful bidders should obtain details of amounts allocated from the DhowCSD Investor Portal/App under the Bids tab on Monday, July 13, 2026. The Central Bank reserves the right to accept applications in full or part thereof or reject them in total without giving any reason,” read the statement in part.

Auction details

CBK said the switch auction will be conducted using a multi-price format based on yields quoted by bidders. The source bond has a quoted yield of 8.8322 per cent and a dirty price of 102.7442.

The destination bond has approximately 6.3 years remaining to maturity and attracts a withholding tax of 10 per cent, compared with 15 per cent on the source bond. Accrued interest on the destination bond stands at Ksh2.1429 per Ksh100 face value.

Participation is open only to investors with unencumbered holdings in Treasury bond FXD1/2021/005 as of July 13. Investors may switch either part or all of their holdings.

Non-competitive bids range from a minimum of Ksh50,000 to a maximum of Ksh50 million, while competitive bids start at Ksh2 million per Central Securities Depository (CSD) account.

Managing debt maturities

The switch auction forms part of the government’s debt management strategy aimed at spreading out debt repayments by encouraging investors to move from shorter-term securities to longer-dated bonds.

CBK said successful bidders will receive allocation details through the DhowCSD Investor Portal, while any remaining cash below the minimum investment amount of Ksh50,000 will be refunded on the settlement date.

The central bank also noted that the destination bond qualifies for statutory liquidity ratio requirements for commercial banks and non-bank financial institutions. It added that the bond may be reopened at a future date.

Investor participation

The announcement comes after strong demand for government securities in recent auctions. On June 25, CBK received Ksh28.06 billion in bids against a Ksh24 billion Treasury bills offer, representing an oversubscription of 116.91 per cent. The 91-day Treasury bill recorded the highest demand.

Investors with outstanding pledges on the source bond have been advised to cancel them at least five days before the switch settlement date to qualify for participation.

CBK has reserved the right to accept applications in full or in part, or reject them without assigning reasons. Successful investors’ portfolios will be updated through the DhowCSD platform before settlement on July 15.