The Central Bank of Kenya (CBK) has invited bids for the re-opening of three long-term fixed coupon treasury bonds to raise a total of KES 80 billion. The proceeds from this auction are earmarked for budgetary support.
This move comes as government securities continue to be the most dominant asset class in the country, accounting for 42.8% (KES 323.6 billion) of the total assets under management by Collective Investment Schemes as of end of 2025.
Key Bond Specifications
The prospectus details three issues with varying tenors and competitive coupon rates:
- FXD1/2012/020: A 20-year bond with 6.6 years remaining to maturity and a coupon rate of 12.0000%.
- FXD1/2019/020: A 20-year bond with 13.0 years remaining to maturity and a coupon rate of 12.8730%.
- FXD1/2021/025: A 25-year bond with 20.1 years remaining to maturity and the highest coupon rate of the trio at 13.9240%.
All three bonds carry a withholding tax of 10% and will be listed on the Nairobi Securities Exchange for secondary trading starting May 11, 2026. Successful bidders are required to obtain their payment keys and amounts payable through the CBK DhowCSD Investor Portal or App on Friday, May 8, 2026.
CBK Bonds Accrued Interest
According to the bond prospectus, the specific accrued interest rates for the three issues are as follows:
- FXD1/2012/020: This issue attracts zero accrued interest (KES 0 per KES 100).
- FXD1/2019/020: This bond attracts an accrued interest of KES 1.2378 per KES 100.
- FXD1/2021/025: This issue attracts an accrued interest of KES 0.2678 per KES 100.
When these bonds are traded, they are typically quoted at a clean price based on the prevailing market yield. However, the actual amount paid by the investor known as the dirty price is the sum of the clean price and the accrued interest. For example, in FXD1/2019/020, if the quoted yield is 12.8730%, the clean price is KES 99.9690. When you add the accrued interest of KES 1.2378, the final dirty price paid by the investor is KES 101.2068.
In FXD1/2021/025, if the quoted yield is 13.9240%, the clean price is KES 99.9914. Adding the accrued interest of KES 0.2678 results in a dirty price of KES 100.2592. While the payment is based on the dirty price, withholding tax is computed strictly on the clean prices.
This bond offering arrives during a period of heightened market interest in Fixed Income Funds. The demand for fixed-rate instruments has further been driven by recent inflationary pressures, most notably the steepest single-cycle fuel price hike in mid-April 2026, which saw diesel and super petrol prices surge past KES 200 per litre.
Also read: CBK T-Bills Record 57.4% Uptake in Mixed Demand Performance
