Kenya Returns to Domestic Bond Market with March Reopenings and Bond Switch Offer

The government has returned to the domestic bond market with a March reopening of two long-dated Treasury bonds as domestic financing approaches planned levels for the fiscal year.

• •By end-December 2025, net cumulative domestic financing stood at KSh 554.96Bn, equivalent to 87% of the FY2025/26 target of KSh 634.75Bn.
• •The reopening of the 2039 and 2046 Treasury bonds comes alongside a separate Treasury bond switch, allowing investors to roll short-dated debt into longer maturities.
• •Taken together, the two operations point to a shift from raising incremental deficit funding toward managing the structure, timing, and risk profile of outstanding domestic debt.

The March reopening extends a funding approach that has defined FY2025/26. Since July 2025, the Central Bank of Kenya has conducted 11 bond reopenings, offering KSh 540Bn and accepting KSh 746.35Bn against bids totalling KSh 1.38Tn.

Net borrowing from these reopenings stands at KSh 626.42Bn, with redemptions limited to a small number of auctions. Persistent demand, particularly for long-dated paper, has allowed Treasury to raise funding while extending duration.

March 2026 Treasury Bond Reopening:

Alongside the reopening, Treasury has also turned to a bond switch to address near-term maturities without expanding net borrowing.

The switch allows holders of a bond maturing in November 2026 to move into a longer-dated issue, reducing refinancing pressure in the near term and smoothing the redemption profile in outer years. It is the fourth Treasury bond switch on record and the second conducted in 2026.

March 2026 Treasury Bond Switch:

The broader funding context explains the strategy. The FY2025/26 fiscal deficit is projected at about KSh 923Bn, with domestic markets expected to provide roughly KSh 635Bn in net financing. By mid-year, most of that domestic plan had already been executed, while net external financing remained modest amid heavy external repayments and delays in some concessional inflows. Discussions with the IMF on a new programme are ongoing, and Treasury has signalled that a Eurobond remains under consideration.

With domestic financing largely in line with the budgeted deficit plan, the March reopening and bond switch highlight a clear focus on maturity management rather than additional borrowing. The approach lengthens duration, limits near-term refinancing risk, and keeps domestic funding aligned with fiscal objectives as the year moves into its final months.