Kenya’s domestic debt market is gathering fresh momentum as the Central Bank of Kenya (CBK) launches the first infrastructure bond (IFB) auction for the 2025/26 fiscal year.
- •This reopening, running from July 21 to August 13, seeks to raise KSh 90 billion through two long-tenor, tax-exempt IFBs: IFB1/2018/015 and IFB1/2022/019.
- •As the monetary policy environment turns more accommodative and T-bill yields remain subdued, investors are increasingly shifting toward long-duration bonds.
- •The government is relying on the bond market to meet its KSh 635.5 billion net domestic borrowing target for FY2025/26.
| Bond | IFB1/2018/015 | IFB1/2022/019 |
|---|---|---|
| Tenor | 15 years (7.5 yrs left) | 19 years (15.6 yrs left) |
| Coupon | 12.5000% | 12.9650% |
| Maturity | 10 Jan 2033 | 28 Jan 2041 |
| Redemption | 40% on 17 Jan 2028; 100% on 10 Jan 2033 | 50% on 9 Feb 2032; 100% on 28 Jan 2041 |
| Tax | Withholding tax exempt | Withholding tax exempt |
The auction period begins July 21 and closes on August 13, 2025, at 10:00am. Settlement follows on August 18. Investors may submit non-competitive bids ranging from KSh 50,000 to KSh 50 million, while competitive bids start at a minimum of KSh 2 million per tenor.
Pricing, Yields, and Accrued Interest
CBK provides an indicative price/yield schedule for both bonds. For example, at a 12.5% yield, IFB1/2018/015 clears at 99.98 (clean) plus KSh 0.96 accrued interest, while IFB1/2022/019 prices at 102.59 with no accrued interest.
No withholding tax applies—consistent with all CBK-issued IFBs—making these bonds attractive.
Market Context and Funding Goals
This infrastructure bond reopening comes on the back of the reopened Treasury bonds (FXD1/2018/020 and FXD1/2018/025) in early July, which raised KSh 66.65 billion against a KSh 50 billion target for general budgetary support. Unlike those FXDs, the current IFB auction is tax-exempt and directly earmarked for infrastructure projects.
The strong uptake in recent auctions demonstrates robust market confidence and willingness to fund infrastructure needs. Both IFB1/2018/015 and IFB1/2022/019 offer double-digit, tax-free returns—an appealing proposition for pension funds, insurers, and long-term savers.
Secondary trading for both bonds opens on August 18, 2025, in multiples of KSh 50,000. Rediscounting is available at 3% above the prevailing yield or coupon rate, if needed.
