The Central Bank of Kenya accepted KSh 94.04Bn from its May bond reopening, the first triple-tranche offering since April 2025, but KSh 57.13Bn in redemptions reduced net new borrowing to KSh 36.91Bn, the second-largest single-auction redemption offset of the fiscal year after August's KSh 94.6Bn.
- •The auction, the 15th since July 2025, drew KSh 106.02Bn in bids against a KSh 80Bn target, a 132.52% performance rate and 1.13x bid-to-cover.
- •Demand concentrated on the FXD1/2012/020, a 20-year bond from 2012 now carrying 6.6 years of remaining life, which absorbed 45% of total bids and CBK accepted nearly all of them.
- •The short and mid-curve bonds cleared above their coupon rates, pricing at discounts of 98.00 and 99.13 per KSh 100 respectively.
| Metric | FXD1/2012/020 | FXD1/2019/020 | FXD1/2021/025 | Combined |
|---|---|---|---|---|
| Remaining Tenor | 6.6 years | 13 years | 20.1 years | |
| Coupon | 12.000% | 12.873% | 13.924% | |
| Bids Received | KSh 47.95Bn | KSh 17.57Bn | KSh 40.50Bn | KSh 106.02Bn |
| Amount Accepted | KSh 47.53Bn | KSh 14.54Bn | KSh 31.97Bn | KSh 94.04Bn |
| Avg Accepted Yield | 12.46% | 13.21% | 13.69% | |
| Price per KSh 100 | 98.00 | 99.13 | 101.81 |
The 25-year paper was the only instrument to price above par at 101.81, with its accepted yield of 13.69% coming in 23 basis points below the 13.924% coupon. Investors were only willing to pay a premium where the coupon offered sufficient carry over prevailing rates.
Non-competitive bids totaled KSh 19.44Bn, or 21% of accepted volume.
Fiscal Year Scorecard
| Metric | FY2025/26 Bond Auctions |
|---|---|
| Auctions | 15 |
| Amount Offered | KSh 740.00Bn |
| Bids Received | KSh 1,715.97Bn |
| Amount Accepted | KSh 981.63Bn |
| Redemptions | KSh 176.97Bn |
| Net Borrowing | KSh 804.66Bn |
Net borrowing of KSh 804.66Bn stands at 91% of the revised FY2025/26 domestic target of KSh 885.9Bn, leaving roughly KSh 81Bn of headroom for the May/June auction(s).
The domestic financing push continues without IMF support. Treasury CS John Mbadi confirmed in March that a deal for a new programme was not expected at this stage, and the 2026 budget does not include IMF funding. Two IMF technical reports released in April flagged concerns about debt reporting, warning that Kenya's narrow legal definition of debt could mask a significant portion of the country's liabilities. The fund has also urged Kenya to classify securitized future tax revenues as debt, a move that could alter the fiscal picture.
Domestic debt has risen from KSh 6.31Tn at the start of the fiscal year to approximately KSh 7.08Tn by March. The IMF's April 2026 Regional Economic Outlook projects debt-to-GDP at 71.6% for 2026, against a statutory anchor of 55% that Kenya is required to meet by 2028.
A KSh 10Bn switch auction from FXD1/2017/010 into FXD1/2021/020 closes on 18 May, the sixth switch on record. Unlike April's switch, which asked investors to accept a 239 basis point coupon cut and drew a 12.8% performance rate, the May operation offers a 48 basis point coupon gain, from 12.966% to 13.444%. CBK has signaled further bond issuance for June.
