CBK Reopens Long-Term Treasury Bonds, Offering Kenyans a Rare Window to Lock in Fixed Returns for Up to 25 Years

Kenyan investors looking for stability, predictable income, and long-term financial planning have been handed a timely opportunity after the Central Bank of Kenya (CBK) reopened two long-term Treasury bonds, allowing individuals and institutions to invest directly in government securities from as little as KSh50,000.

The reopened bonds—a 15-year fixed-coupon bond and a 25-year fixed-coupon bond—are designed to raise KSh50 billion to support government budgetary needs. More importantly for investors, they offer a chance to lock in relatively attractive interest rates at a time when expectations are growing that yields could gradually soften in the medium term.

The move reinforces the government’s continued reliance on the domestic debt market to finance expenditure, while also deepening access to long-term savings instruments for ordinary Kenyans.

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A Strategic Reopening, Not a New Issue

Unlike fresh issuances, the bonds currently on offer are reopened Treasury bonds, meaning they were issued previously but are being brought back to the market to raise additional funds under the same terms. This approach allows the government to consolidate borrowing into fewer, larger benchmark bonds, improving liquidity in the secondary market and making price discovery more efficient.

According to the prospectus released by CBK on January 22, the two bonds available are:

• FXD3/2019/015 – a 15-year Treasury bond with a remaining maturity of 8.4 years
• FXD1/2018/025 – a 25-year Treasury bond with a remaining maturity of 17.3 years

Together, the two instruments are expected to raise KSh50 billion, forming part of the government’s domestic borrowing programme for the current fiscal period.

Understanding the 15-Year Treasury Bond on Offer

The 15-year bond, FXD3/2019/015, carries a fixed coupon rate of 12.34 percent per annum and is scheduled to mature on July 10, 2034.

Because the bond was originally issued in 2019, investors purchasing it now will be holding it for the remaining 8.4 years rather than the full 15-year original tenor. Nevertheless, the bond still qualifies as a long-term investment, particularly for individuals seeking steady income over the next decade.

The interest payments are made semi-annually, providing predictable cash flow for investors such as retirees, income-focused savers, and institutions managing long-term liabilities.

The 25-Year Treasury Bond: A Long Horizon for Patient Capital

For investors with an even longer outlook, the 25-year Treasury bond, FXD1/2018/025, offers a compelling proposition.

This bond carries a coupon rate of 13.4 percent and has a remaining maturity of 17.3 years, with a final redemption date of May 25, 2043.

Long-dated bonds such as this are typically favoured by:

• Pension funds
• Insurance companies
• High-net-worth individuals
• Investors planning for retirement or intergenerational wealth transfer

By locking in a fixed return over such a long period, investors can hedge against reinvestment risk—the danger that future interest rates may be lower when current investments mature.

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Timeline: When and How the Auction Will Run

CBK has laid out a clear timetable for the bond sale:

• Offer opens: January 22, 2026
• Offer closes: February 11, 2026
• Auction date: February 11, 2026
• Settlement date: February 16, 2026
• Secondary trading begins: February 16, 2026

This roughly three-week subscription window gives investors ample time to evaluate pricing, compare yields, and submit bids.

Who Can Invest and How Much?

One of the most notable features of the reopened bonds is their accessibility.

Non-Competitive Bidders (Retail Investors)

Retail investors applying through non-competitive bids can participate with:

• Minimum investment: KSh50,000
• Maximum investment: KSh50 million

Non-competitive bidders do not specify a yield. Instead, they accept the weighted average yield determined at the auction. This makes participation simpler for individual investors who may not wish to engage in yield pricing strategies.

Competitive Bidders (Institutional and High-Value Investors)

Competitive bidders—typically banks, fund managers, SACCOs, and large investors—must:

• Invest a minimum of KSh2 million per CSD account per tenor
• Specify the yield at which they are willing to lend to the government

This structure ensures that sophisticated investors play a role in price discovery, while still preserving broad access for the general public.

Tax Treatment and Net Returns

Interest earned on both bonds is subject to a withholding tax of 10 percent, deducted at source. This tax treatment is consistent with Kenya’s tax regime for government securities and remains relatively favourable compared to many alternative fixed-income investments.

For example:

• A gross coupon of 12.34% translates to a net return of approximately 11.11%
• A gross coupon of 13.4% yields a net return of about 12.06%

Given the sovereign backing of the bonds, these after-tax returns remain attractive on a risk-adjusted basis.

Pricing, Accrued Interest, and What Investors Need to Know

Because these are reopened bonds, investors must also account for accrued interest, which compensates previous holders for the period between the last coupon payment and the settlement date.

According to CBK’s pricing tables:

• Accrued interest on the 15-year bond is KSh0.9492 per KSh100
• Accrued interest on the 25-year bond is KSh2.3192 per KSh100

This accrued interest is added to the clean price when calculating the total amount payable at settlement.

CBK has provided detailed pricing tables in the prospectus, guiding investors on clean prices at various yields to maturity—an important tool for competitive bidders and informed retail participants.

Secondary Market Trading and Liquidity

Liquidity is a key consideration for long-term bonds, and CBK has confirmed that secondary trading for both instruments will commence on February 16, 2026.

Key features include:

• Trading in multiples of KSh50,000
• Availability on the Nairobi Securities Exchange bond market
• Price movements reflecting prevailing interest rates and market conditions

The existence of a secondary market means investors are not locked in until maturity. Bonds can be sold before maturity if liquidity needs arise, though prices may fluctuate depending on interest rate movements.

Rediscounting: A Safety Valve for Investors

As an additional safeguard, CBK allows Treasury bonds to be rediscounted as a last resort.

Rediscounting enables bondholders to obtain short-term liquidity by pledging their bonds to the Central Bank. The rediscount rate is set at:

• 3 percent above the prevailing market yield or coupon rate, whichever is higher

While not intended as a routine funding mechanism, rediscounting provides a crucial backstop for investors facing unexpected cash needs.

A Digital Shift: Paying via M-Pesa Through DhowCSD

One of the most investor-friendly innovations accompanying the bond reopening is the expanded use of DhowCSD, CBK’s digital Central Securities Depository platform.

Since November 2025, investors can now settle bond payments directly through DhowCSD using M-Pesa, for amounts of up to KSh250,000.

This development significantly lowers barriers to entry by:

• Eliminating the need for physical bank visits
• Reducing paperwork and delays
• Allowing investors to complete settlement on their mobile phones

For retail investors, particularly those outside major urban centres, this represents a meaningful step toward financial inclusion.

Opening a DhowCSD Account: What Investors Need

To participate, investors must have an active DhowCSD account. Registration requires:

• A valid email address
• Access to a mobile phone or computer
• An active Kenyan mobile number

The process is fully digital and can be completed online, making it easier than ever for first-time investors to access government securities.

Why This Bond Reopening Matters

1. For Individual Investors

For ordinary Kenyans, the reopening provides:

• Access to long-term, low-risk investments
• Predictable income streams
• Protection against reinvestment risk
• A hedge against market volatility

In a landscape where equities can be volatile and property requires significant capital, Treasury bonds remain one of the most reliable wealth-preservation tools.

2. For Long-Term Financial Planning

The availability of a 25-year bond is particularly important for:

• Retirement planning
• Education funds
• Legacy and estate planning

Locking in fixed returns for nearly two decades can form the backbone of a disciplined, long-term financial strategy.

3. For the Government and the Economy

From the government’s perspective, domestic bond reopenings:

• Reduce reliance on external borrowing
• Lower foreign exchange risk
• Support budget financing at predictable costs

A strong domestic investor base also enhances financial stability and cushions the economy from external shocks.

4. For Financial Market Development

Reopened bonds help:

• Build liquid benchmark securities
• Improve secondary market trading
• Enhance yield curve visibility
• Support pricing of other financial instruments

This contributes to a deeper, more efficient capital market.

Risks Investors Should Consider

While Treasury bonds are low-risk, they are not risk-free.

Key considerations include:

• Interest rate risk: Bond prices fall when yields rise
• Inflation risk: Fixed coupons may lose purchasing power if inflation accelerates
• Liquidity risk: Selling before maturity may result in price discounts

Investors should align bond investments with their time horizons and risk tolerance.

The Bigger Picture: A Shift Toward Retail Participation

The combination of low minimum investment thresholds, digital settlement via M-Pesa, and transparent pricing reflects CBK’s broader strategy to democratize access to government securities.

By bringing retail investors into the domestic debt market, CBK is:

• Broadening the investor base
• Reducing concentration risk
• Encouraging a culture of saving and investing

Over time, this shift could reshape how Kenyans build wealth and engage with public finance.

Conclusion: A Timely Opportunity in a Changing Rate Environment

The reopening of the 15-year and 25-year Treasury bonds comes at a pivotal moment. With economic conditions stabilizing and expectations of gradually easing interest rates, investors have a rare chance to lock in attractive fixed returns for the long term.

For retail investors, the low entry point and digital payment options remove traditional barriers. For institutional players, the bonds offer duration, yield, and liquidity. And for the government, the exercise strengthens domestic financing capacity while supporting fiscal stability.

In short, this bond reopening is not just a fundraising exercise—it is a reflection of how Kenya’s financial system is evolving to meet the needs of both the state and its citizens.

photo source: Google

By: Elsie Njenga

27th January, 2026