The Central Bank of Kenya (CBK) has announced the reopening of two fixed-coupon Treasury bonds in October, FXD1/2018/015 (12.650%, due May 2033) and FXD1/2021/020 (13.444%, due July 2041), seeking KSh 50 billion for budgetary support.
- •The move extends a pattern of heavy reopenings in FY 2025/26, as the government accelerates its borrowing programme to cover a projected KSh 923.2 billion fiscal deficit.
- •Net financing needs for the year are KSh 901 billion, with KSh 613.6 billion to come from domestic markets and KSh 287.4 billion externally.
- •Gross financing requirements stand at KSh 1.55 trillion, reflecting both the deficit and maturing obligations.
FY 2025/26 Borrowing So Far
In the first quarter of FY25/26, the CBK has already tapped markets aggressively:
- •July 2025 Reopenings: Raised KSh 66.7 billion from the 20-year FXD1/2018/020 and 25-year FXD1/2018/025 against a KSh 50 billion offer.
- •August 2025 IFB Reopenings and Tap Sale: Record demand pushed bids to KSh 323.4 billion, with CBK accepting about KSh 95 billion in the reopening and KSh 179.8 billion in a follow-on tap, mopping up nearly KSh 275 billion in total.
- •September 2025 Reopenings: Mixed results, with a weak 30-year SDB drawing only 40% subscription, but the 20- and 25-year reopenings rebounded strongly, raising KSh 61.4 billion.
By end-September, CBK had already raised well over KSh 400 billion domestically, covering more than 40% of the net domestic borrowing target for the fiscal year. The strategy shows a clear preference for reopening existing bonds across 15- to 25-year maturities, while the ultra-long 30-year paper has struggled to attract demand.
Outlook
The Treasury’s reliance on front-loaded domestic issuance underscores pressure to finance redemptions while keeping borrowing costs in check.
Domestic debt service in FY25/26 is projected at KSh 1.3 trillion, part of an overall KSh 1.9 trillion debt service bill. While appetite for infrastructure bonds remains strong due to their tax-free status, conventional long bonds have also seen heavy take-up at yields near 14%.
The heavy reliance on the domestic market raises rollover risks, but CBK’
