The Central Bank of Kenya has opened a KSh40 billion Treasury bond auction consisting entirely of long-dated securities, excluding the shorter 10-year instrument offered in its previous sale.
The auction reopens a 20-year bond with 12.8 years remaining to maturity and a 25-year bond with 21.4 years remaining. Bidding closes on July 22, 2026, while successful investors must settle their purchases on July 27.
By offering only long-term securities, the government is testing whether banks, pension funds, insurers and other investors will commit capital further along the yield curve without relying on a shorter bond to anchor demand.
Key Overview
- CBK is seeking KSh40 billion for budgetary support.
- The offer consists of reopened 20-year and 25-year Treasury bonds.
- Bidding runs from July 14 to July 22, 2026.
- Settlement is scheduled for July 27, 2026.
- The 20-year bond has a 12.873% coupon and matures in March 2039.
- The 25-year bond has a 14.188% coupon and matures in September 2047.
- The structure supports Kenya’s strategy of issuing medium- and long-term debt to extend its repayment profile.
CBK Removes the Shorter Bond From Its New Offer
CBK’s latest Treasury bond prospectus invites investors to bid for two reopened fixed-coupon securities worth a combined KSh40 billion.
The first instrument, FXD1/2019/020, was originally issued with a 20-year tenor. It now has approximately 12.8 years remaining before its March 21, 2039 maturity date and carries a coupon rate of 12.873%.
The second instrument, FXD1/2022/025, has about 21.4 years remaining before maturing on September 23, 2047. Its coupon rate is 14.188%, making it the higher-income security in the offer.
Unlike CBK’s earlier July auction, the latest sale does not contain a shorter 10-year security. This leaves investors to choose between two longer maturities and provides a clearer test of demand at the long end of Kenya’s domestic yield curve.
Higher Coupon Could Support the 25-Year Bond
The 25-year instrument’s 14.188% coupon is likely to be an important attraction for investors seeking predictable long-term income.
Institutional investors such as pension schemes and insurance companies often favour longer-dated bonds because their extended cash flows can be matched against long-term liabilities. Banks may also purchase the securities for liquidity-management purposes or use them as collateral.
However, investor returns will depend on the yields submitted during the auction rather than coupon rates alone. If investors demand a yield higher than a bond’s coupon, the security will generally be priced below its face value. A lower required yield would produce a price above par.
CBK’s official pricing guide shows that the 20-year bond trades below par at yields above approximately 12.87%. The 25-year instrument similarly falls below par when its market yield rises above its 14.188% coupon.
The 20-year bond may therefore face a tougher demand test if investors continue requiring yields significantly above 13%.
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Auction Follows a Three-Bond July Sale
The new offer follows an earlier KSh70 billion auction involving reopened 10-year and 20-year bonds alongside a recently issued 30-year security.
Those instruments had remaining maturities of approximately 5.8 years, 15.2 years and 29.9 years respectively.
The earlier auction gave investors a wider duration choice, including a shorter bond that carried less interest-rate and maturity risk. Removing that option from the current sale could direct more bids towards the two longer instruments, although investors remain free to reduce their overall participation.
Demand will therefore offer an important signal about whether the market is willing to absorb longer-dated government debt at yields acceptable to the Treasury.
Kenya Seeks to Extend Its Debt Maturity Profile
The auction is consistent with the government’s 2026 Medium-Term Debt Management Strategy, which guides borrowing for the 2026/27 financial year and the period through 2028/29.
The strategy seeks to meet government financing needs while limiting refinancing, interest-rate and foreign-exchange risks.
Kenya’s FY2026/27 budget framework states that the Treasury plans to extend the maturity profile of public debt through greater issuance of medium- and long-term instruments.
Longer maturities can reduce the frequency with which debt must be refinanced. This lowers the risk that the government will face a large volume of securities maturing during a period of high interest rates or weak market demand.
The trade-off is that investors usually require higher yields to hold longer-term debt because of inflation, interest-rate and liquidity risks.
Investors Can Enter With KSh50,000
Non-competitive investors can bid from a minimum of KSh50,000 up to KSh50 million. Competitive bids require at least KSh2 million per Central Securities Depository account for each tenor.
Competitive investors specify the yield they are willing to accept, while non-competitive investors receive the weighted average yield determined at the auction.
Both bonds will be listed for secondary trading from July 27 in multiples of KSh50,000. They are also eligible for use as collateral when accessing loans from regulated financial institutions.
The auction’s outcome will show whether the higher coupon on the 25-year bond can generate sufficient demand and whether investors are willing to purchase the lower-coupon 20-year paper at a discount.
For Kenya, a successful KSh40 billion sale would support budget financing while advancing the government’s effort to shift domestic borrowing towards longer maturities.
Sources
Central Bank of Kenya / National Treasury
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