The National Treasury has made significant progress in its fiscal year 2025/26 domestic borrowing plan, with the latest bond auction raising KSh 85.3 billion.
- •The Central Bank of Kenya (CBK) reopened 15- and 20-year Treasury bonds, attracting KSh 118.9 billion in bids against a KSh 50 billion offer, reflecting a bid-to-cover ratio of 1.39.
- •This success, with yields dropping to 12.65% and 13.53%, pushes net domestic borrowing to approximately KSh 432.1 billion, 70% of the KSh 613.5 billion target.
- •The government’s strategy, outlined in the August 2025 Borrowing Plan, targets KSh 634.8 billion in gross domestic borrowing to fund a KSh 901.0 billion deficit, with bonds dominating issuances.
By October 9, the domestic debt stock reached KSh 6,675.45 billion, up KSh 349.44 billion since June 30. The October 20 auction adds an estimated KSh 82.6 billion in nominal value, bringing the total to KSh 6,758.1 billion.
Earlier auctions, including the August 25 tap sale raising KSh 179.8 billion, have fueled this momentum. Treasury bills have contributed an additional KSh 43.4 billion.
This front-loaded approach supports a 5.0% GDP growth in Q2 2025 but raises concerns over interest costs and private sector crowding out.
FY 2025/26 Treasury Bond Auction Summary (KSh Billion)
| Auction Date | Issue Nos. | Amount Offered | Bids Received | Amount Accepted | Redemptions | Net Borrowing |
|---|---|---|---|---|---|---|
| July 14, 2025 | FXD1/2018/020 & 025 | 50.0 | 76.9 | 66.7 | 0.0 | 66.7 |
| August 18, 2025 | IFB1/2018/015 & 019 | 90.0 | 323.4 | 95.0 | 94.6 | 0.4 |
| August 25, 2025 | IFB1/2018/015 & 019 | 50.0 | 207.5 | 179.8 | 0.0 | 179.8 |
| September 8, 2025 | SDB1/2011/030 | 20.0 | 8.1 | 2.4 | 0.0 | 2.4 |
| September 22, 2025 | FXD1/2018/020 & 025 | 40.0 | 97.3 | 61.4 | 0.0 | 61.4 |
| October 20, 2025 | FXD1/2018/015 & 020 | 50.0 | 118.9 | 85.3 | 0.0 | 85.3 |
| Total | – | 300.0 | 832.1 | 490.6 | 94.6 | 396.0 |
Economists note the CBK’s recent 25-basis-point rate cut, amid stable inflation, may ease borrowing costs further.
Revenue shortfalls—KSh 419.2 billion against a KSh 495.8 billion target by August—highlight fiscal pressures. The government aims to reduce the deficit to 3.4% of GDP by 2028/29, necessitating sustained revenue efforts.
