The Central Bank of Kenya has launched a KSh 90Billion borrowing programme for May, pairing the largest bond reopening of the fiscal year with a sixth switch auction as Treasury moves to close the remaining domestic financing gap before the fiscal year ends on 30 June.
- •The reopening offers three bonds in a single KSh 80Billion auction, the first triple-tranche offering in FY2025/26 and the first since April 2025, spanning maturities from 6.6 to 20.1 years remaining.
- •The auction is on 6 May, with settlement on 11 May. At KSh 80Bn, the offer exceeds every reopening this fiscal year except February's KSh 100Bn auction and doubles the KSh 40Bn offered in April's first reopening.
- •Domestic debt has risen from KSh 6.31Tn at the start of the fiscal year to approximately KSh 7.08Tn by March 2026.
Re-opening: KSh 80Bn, Three Bonds
| Metric | FXD1/2012/020 | FXD1/2019/020 | FXD1/2021/025 |
|---|---|---|---|
| Tenor | 20-Year (6.6 yrs) | 20-Year (13 yrs) | 25-Year (20.1 yrs) |
| Coupon | 12.000% | 12.873% | 13.924% |
| Maturity | 01 Nov 2032 | 21 Mar 2039 | 09 Apr 2046 |
| Accrued Interest | KSh 0 per KSh 100 | KSh 1.24 per KSh 100 | KSh 0.27 per KSh 100 |
Two of the three bonds are returning names with the FXD1/2019/020 and FXD1/2021/025 featuring in the March reopening, where the 25-year bond drew a 4.15x bid-to-cover ratio.
The FXD1/2012/020, a 20-year bond from 2012 now with just 6.6 years remaining, prices at par at 12.00% with zero accrued interest, offering a medium-term entry point alongside the longer paper.
Switch: KSh 10Bn, New Source Bond
| Metric | Source Bond | Destination Bond |
|---|---|---|
| Issue | FXD1/2017/010 | FXD1/2021/020 |
| Tenor | 10-Year (1.2 yrs remaining) | 20-Year (15.22 yrs remaining) |
| Coupon | 12.966% | 13.444% |
| Maturity | 19 Jul 2027 | 22 Jul 2041 |
| Dirty Price | 108.8972 | Multi-priced |
| Yield | 8.7205% | Yield quoted |
The auction is on 18 May, with settlement on 20 May. Only investors holding unencumbered positions in FXD1/2017/010 as at 18 May are eligible.
The operation is the sixth bond switch on record and the fourth in 2026. It targets a new source bond, FXD1/2017/010 maturing July 2027 with 1.2 years remaining, a departure from the FXD1/2016/010 tapped in January and April. The KSh 10Bn target is the smallest switch offer in 2026, likely reflecting the April lesson: that operation drew just KSh 2.56Bn against a KSh 20Bn target, a 12.8% performance rate, the weakest in programme history.
The economics are markedly different this time with the destination bond coupon of 13.444% exceeding the source bond's 12.966%, meaning investors gain roughly 48 basis points in coupon rather than sacrificing yield. That reversal, combined with a 14-year duration extension into a bond maturing in 2041, should make the proposition more attractive to holders weighing their options ahead of a July 2027 redemption.
Net borrowing through bond auctions has reached KSh 767.75Bn across 15 auctions since July 2025, leaving roughly KSh 118Bn of headroom against the revised domestic target of KSh 885.9Bn. The May reopening alone, at KSh 80Bn offered, could close most of that gap, particularly if CBK accepts above target as it has in recent months.
The IMF's April 2026 Regional Economic Outlook projects debt-to-GDP rising to 71.6% in 2026, well above the statutory 55% anchor Kenya is required to meet by 2028.
