CBK launches Ksh40B treasury bonds for budgetary support
By Kenneth Mwenda, November 27, 2025The Central Bank of Kenya (CBK) has reopened two long-term fixed-coupon Treasury bonds, offering investors the chance to participate in government debt instruments with extended maturities. The move forms part of the central bank’s ongoing debt management strategy and comes amid a growing reliance on domestic borrowing to finance fiscal obligations.
The total amount on offer for this reopening is Ksh40 billion.The reopened bonds include a 30-year paper, SDB1/2011/030, with a coupon rate of 12 per cent, maturing on January 21, 2041, and a 25-year paper, FXD1/2021/025, offering 13.924 per cent per annum and maturing on April 9, 2046.
Both bonds are subject to a 10 per cent withholding tax. The auction is set for December 3, 2025, with bids due the same day by 10:00 am. Settlement is scheduled for December 8, 2025.
CBK allows both competitive and non-competitive bids. Non-competitive investors can place bids ranging from Ksh50,000 to Ksh50 million, while competitive bids require a minimum of Ksh2 million per Central Securities Depository (CSD) account per tenor.
Successful investors will receive their payment details through the CBK DhowCSD Investor Portal on December 5. Investors who fail to settle may be barred from future participation in government securities.
The bonds will be listed on the Nairobi Securities Exchange and qualify for statutory liquidity ratio requirements under the Banking Act CAP 488. Secondary trading, in multiples of Ksh50,000, begins on December 8, allowing investors to buy and sell the bonds on the open market.
CBK has also retained a rediscounting facility, permitting bondholders to access cash at 3 per cent above the prevailing market yield or coupon rate, whichever is higher, through written instructions to the central bank.
Accrued interest and yields
Accrued interest applies to both instruments. For example, a quoted yield of 12 per cent for the 30-year bond translates to a clean price of Ksh99.9603 per Ksh100, with accrued interest of Ksh3.9231, bringing the total to Ksh103.8834. For the 25-year bond, a quoted yield of 13.924 per cent results in a clean price of Ksh99.9639, with accrued interest of Ksh1.3388, giving a total of Ksh101.3027.
The reopening of these long-term papers allows CBK to lengthen the maturity profile of domestic debt while providing investors with predictable, long-duration returns. Pension funds and insurance companies remain the main participants, attracted by the steady income streams these bonds offer. Retail investor participation is limited due to the high minimum bid thresholds.
The bond sale comes amid rising domestic borrowing. Recent Treasury data shows that Kenya’s debt burden increased by at least Ksh250 billion between June and September 2025.
This was largely driven by a Ksh340 billion rise in domestic debt, even as external debt declined by around Ksh80 billion. This reflects a broader shift in government financing strategy, reducing reliance on expensive external loans that expose the country to foreign exchange risks.
Secondary trading through the DhowCSD platform and licensed financial institutions ensures liquidity for investors, while the rediscounting option provides a safety net in case of urgent cash needs. CBK also reserves the right to partially accept or reject applications without explanation, offering flexibility in managing bond allocations.