The Central Bank of Kenya (CBK) is targeting to raise KES 40B through two re-opened treasury bonds – FXD1/2012/020 and FXD1/2022/015. FXD1/2012/020 has 7.0 years to maturity with a coupon rate of 12.0000%, while FXD1/2022/015 has 11.4 years to maturity and a coupon rate of 13.9420%. The period of sale for the two bonds is 23rd October 2025 to 5th November 2025, with the value date set for the 5th of November 2025. Both instruments carry a withholding tax of 10% and the deadline for submission of bids by investors is 5th November 2025 at 1000H.
October Auction Raised KES 85.3 Billion
In the October bond auction, the Central Bank of Kenya (CBK) raised KES 85.3B across two treasury bonds – FXD1/2018/015 and FXD1/2021/020. The CBK had targeted to raise KES 50 billion, but bids on the reopened 15- and 20-year treasury bonds, attracted KES 118.9 billion in bids against KES 50 billion offer, with yields dropping to 12.65 % and 13.53%. The FXD1/2018/015 attracted bids worth KES 44.9 billion, while for the FXD1/2021/020, bids were KES 73.9 billion, collectively resulting in a performance rate of 297%. The CBK accepted KES 31.6 billion and KES 53.7 billion, respectively, across the two instruments that had coupon rates of 12.6950% and 13.4440%, respectively, and average rates of accepted bids of 12.6518% and 13.4440%, respectively.
The October auction brought the total amount on offer through treasury bonds in the 2025/2026 fiscal year to KES 300 billion, which saw investors submit bids worth KES 832 billion, translating to an aggregate performance rate of 277%. The CBK has so far accepted a total of KES 491 billion and rejected a KES 341 billion, with the current financial year currently 4 months in. For the 2025/2026 fiscal year, the government’s gross financing requirements total KES 1.5 trillion, equivalent to 8% of Gross Domestic Product (GDP). Interest payment requirements have been penciled in at KES 1.1 trillion, or 5.7% of GDP, with domestic interest at KES 851 billion and external interest at KES 246 billion, equivalent to 4.4% and 1.3% of GDP, respectively.
Principal payments total KES 646 billion, or 3.4% of GDO, with domestic and external principal payments amounting to KES 306 billion and KES 340 billion, respectively, equivalent to 1.6% and 1.8% of GDP, respectively.
On a net basis the financing requirement for the fiscal year is KES 901 billion, or 4.7% of GDP, projected to be financed externally to the tune of KES 248 billion, and domestically to the tune of KES 653 billion (28:72 ratio mix), equivalent to 1.4% and 3.3% of GDP.
This advance planning approach supports a 5.0% GDP growth in Q2 2025 but raises concerns over interest costs and private sector crowding out. The government’s borrowing via treasury bonds and other revenue-raising efforts will be crucial in managing the deficit and achieving economic goals. Economists note that the recent 25 basis point rate cut by the CBK to bring the Central Bank Rate to 9.25% may ease borrowing costs further. However, revenue shortfalls pose a challenge, with KES 419.2 billion collected against a target of KES 495.8 billion by August.
CBK Places Kenya’s Domestic Debt at KES 6.6 Trillion
As of October 2025, treasury bills excluding repos accounted for 16.6% of the total domestic debt, or KES 1.1 trillion in aggregate terms. Treasury bonds accounted for 83.4% of total domestic debt, or KES 5.4 trillion in absolute terms. Cumulatively, treasury bills and treasury bonds held KES 6.5 trillion, or 97%.
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