After first clearing near-term refinancing risk through a switch auction, Kenya has moved decisively back to cash-raising, opening a KSh 50 billion February bond reopening as domestic markets continue to shoulder the FY2025/26 budget amid a prolonged absence of IMF-linked external funding.
- •The Central Bank of Kenya has reissued FXD3/2019/015 and FXD1/2018/025, offering investors the 15-year and 25-year tenors in the second bond reopening of calendar year 2026.
- •The February reopening will test how much further the domestic market can absorb as borrowing deepens into the second half of the fiscal year.
- •The auction is scheduled for 11 February, with settlement on 16 February, and the proceeds are earmarked for budgetary support.
The reopening follows a switch auction completed earlier in the week, where CBK exchanged holdings of a shorter-dated bond into a longer-tenor issue. That operation extended maturities and reduced near-term refinancing pressure without adding new debt, allowing the Treasury to separate liability management from fresh funding and return to the market with a clean cash-raising operation.
The February offer lands against a backdrop of sustained domestic borrowing in FY2025/26. From July through January, Treasury bond reopenings offered KSh 440 billion, attracted about KSh 1.17 trillion in bids and delivered roughly KSh 645.8 billion in accepted amounts. After KSh 119.8 billion in redemptions, net domestic borrowing from bonds stood at about KSh 526.0 billion, excluding weekly Treasury bill auctions, which are part of short-term liquidity management.
January marked the first bond auction of 2026, where CBK raised KSh 60.6 billion after receiving KSh 71.5 billion in bids for the 20- and 25-year FXDs, reinforcing investor appetite for long-dated paper. Pension funds and insurers have continued to anchor demand at the long end of the curve, allowing the Treasury to front-load issuance while keeping rollover risk contained.
The FY2025/26 financing plan targets KSh 901.0 billion in net funding, split between KSh 613.5 billion from domestic sources and KSh 287.4 billion from external borrowing. As of early 2026, no IMF disbursements have been received in the fiscal year, and other flexible external budget-support inflows linked to IMF signalling have yet to materialise.
Project-linked external loans continue to disburse, but these inflows are earmarked and provide limited support for day-to-day cash needs. In their absence, medium- and long-dated bonds have become the primary budget plug.
With external budget support still unresolved, sustained demand at the long end is no longer just supportive, it is critical to maintaining funding momentum and avoiding renewed pressure at the short end of the curve.
