CBK seeking to raise Sh40 billion from investors for budgetary support

Central Bank of Kenya/FILE

The Central Bank of Kenya (CBK) is seeking to raise Sh40 billion from the public for government budgetary support.

The sale involves a 15-year bond and a 25-year bond which are being reopened for new investors. This means that the reopened fixed-coupon Treasury bonds were previously sold before and are still active in the market.

“Central Bank of Kenya, acting in its capacity as fiscal agent for the Republic of Kenya, invites bids for the above bonds,” CBK said in its November bond prospectus.

The Apex bank said the sale period runs from November 11 to November 19, 2025, and investors who take part must make their payments by November 24, 2025.

The 15-year bond will earn investors 12.34 per cent interest each year, while the 25-year bond will pay 14.19 per cent, with both earnings taxed at 10 per cent.

The proceeds from the bond sale will be used for general budgetary support, even as the government continues to rely heavily on domestic borrowing to finance fiscal obligations.

Latest data by the National Treasury shows that the country has added at least Sh250 billion to its debt burden in three months from June to September, driven by a Sh340 billion rise in domestic borrowing while external debt declined by about Sh80 billion.

This is a classic shift in government financing model, tilting toward President William Ruto’s promise to cut on expensive external loans that carry forex exchange pressures.

“Secondary trading in both bonds is set to commence on November 24, allowing investors to buy and sell in multiples of Sh50,000 through the CBK’s DhowCSD platform or licensed financial institutions,” CBK said in the dispatch.

The central bank has also maintained the rediscounting window for liquidity support, allowing bondholders to access cash against their holdings at three per cent above the prevailing market yield or coupon rate, whichever is higher.

The move to reopen the two long-term papers is seen as part of CBK’s debt management strategy to lengthen the maturity profile of domestic debt while offering investors stable, long-duration investment opportunities amid easing inflation expectations and stabilising interest rates.

 The 15-year bond matures on July 10, 2034, while the 25-year bond will mature on September 23, 2047.

Market data shows that the appetite for long-dated papers has remained steady among pension funds and insurance firms seeking predictable income streams, though retail investor participation remains limited due to high minimum investment thresholds.

The auction comes as the government faces pressure to balance fiscal consolidation efforts with sustained infrastructure and social sector spending, leaving the state to resort to treasury bonds as a critical tool for domestic resource mobilisation.