The Central Bank of Kenya's fifth bond switch auction drew just KSh 2.56Bn in bids against a KSh 20Bn target, a 12.80% performance rate that marks the weakest result in the short history of Kenya's switch programme.
- •CBK accepted KSh 1.75Bn, converting just KSh 1.76Bn of the source bond FXD1/2016/010, which matures in August 2026, into the destination FXD1/2018/015 due in May 2033.
- •With only four months to maturity, FXD1/2016/010 is effectively a money market instrument yielding 7.67%.
- •Holders who have stayed through the January switch are likely those with a preference for near-term liquidity or an unwillingness to extend duration by 6.8 years at current pricing.
| Metric | Result |
|---|---|
| Destination Bond | FXD1/2018/015 |
| Maturity | 09 May 2033 |
| Coupon | 12.650% |
| Amount Offered | KSh 20.00Bn |
| Bids Received | KSh 2.56Bn |
| Performance Rate | 12.80% |
| Amount Accepted | KSh 1.75Bn |
| Bid-to-Cover | 1.46x |
| Avg Accepted Yield | 11.97% |
| Price per KSh 100 | 108.36 |
| Amount Switched | KSh 1.76Bn |
The result is a sharp departure from the two prior switches in 2026. The January operation, which targeted the same source bond FXD1/2016/010, drew KSh 26.49Bn in bids and accepted KSh 25.17Bn against a KSh 20Bn offer, a 132% performance rate. The March switch, converting FXD1/2021/005 into FXD3/2019/015, attracted KSh 22.21Bn and accepted KSh 18.4Bn against a KSh 15Bn target.
| Switch | Date | Source | Target | Bids | Accepted | Performance |
|---|---|---|---|---|---|---|
| 3rd | Jan 2026 | FXD1/2016/010 | KSh 20Bn | KSh 26.49Bn | KSh 25.17Bn | 132% |
| 4th | Mar 2026 | FXD1/2021/005 | KSh 15Bn | KSh 22.21Bn | KSh 18.40Bn | 148% |
| 5th | Apr 2026 | FXD1/2016/010 | KSh 20Bn | KSh 2.56Bn | KSh 1.75Bn | 12.8% |
The weak uptake likely reflects exhaustion of willing sellers in the source bond. The January switch already absorbed KSh 25.17Bn of FXD1/2016/010 holdings, and remaining holders appear to prefer collecting the 15.039% coupon through the August maturity rather than accepting a 239 basis point reduction to 12.650% and paying a premium of 108.36 per KSh 100 for the destination bond.
The accepted yield of 11.97% came in well below both the destination bond's 12.65% coupon and the market weighted average of 12.32%, indicating CBK rejected higher-yield bids even in a thinly subscribed auction.
The result leaves the bulk of FXD1/2016/010's remaining outstanding balance to be redeemed at maturity in August, adding to near-term refinancing pressure that Treasury will need to address through regular issuance. CBK has signalled further bond issues for May 2026, with details to be provided in forthcoming prospectuses.
