The Central Bank of Kenya (CBK) has successfully raised KSh 71.7 billion through the reopening of three Treasury bonds, according to auction results released on April 2, 2025.
The bonds, identified as FXD1/2020/015, FXD1/2022/015, and FXD1/2022/025, attracted total bids amounting to KSh 71.728 billion, surpassing the initial target of KSh 70 billion. The government intends to use the funds raised from the bond sales primarily for debt redemptions and budgetary support.
Strong Investor Interest in Treasury Bonds
The three bonds were reopened to investors through a CBK prospectus, with the auction registering a solid turnout. The total bids received exceeded the target, leading to an acceptance of KSh 71.398 billion.
According to CBK, a significant portion of the funds—KSh 90.84 billion—will be allocated for redemptions, while the remaining KSh 19.46 billion will go toward new borrowing and fiscal operations.
The breakdown of bids per bond is as follows:
- FXD1/2020/015 received KSh 20.89 billion in bids, with CBK accepting KSh 20.86 billion.
- FXD1/2022/015 attracted KSh 18.14 billion, with an acceptance of KSh 17.98 billion.
- FXD1/2022/025, which has the longest tenure, saw the highest interest, with bids totaling KSh 32.68 billion, of which KSh 32.36 billion was accepted.
The market-weighted average interest rates for accepted bids varied among the bonds, with FXD1/2020/015 yielding 13.66%, FXD1/2022/015 at 13.87%, and FXD1/2022/025 offering the highest rate of 14.25%.
Moderate Demand Despite Competitive Interest Rates
Economist George Orido, speaking to City Mirror, described the auction demand as moderate, noting that the bid-to-cover ratio for the bonds hovered around 1.00. This suggests that while the market found the bonds attractive, demand was not overwhelming, possibly due to alternative investment opportunities, inflation concerns, and interest rate expectations.
“The results indicate that while investors were interested in these bonds, they were not aggressively competing for allocations. This could be influenced by prevailing market conditions, including inflation and other available investment options,” Orido explained.
Bond Maturity and Future Issuances
Each of the reopened Treasury bonds has different maturity dates and semi-annual coupon payment schedules:
- FXD1/2020/015 will mature on February 5, 2035, with coupon payments occurring twice a year, starting from August 18, 2025.
- FXD1/2022/015 follows a similar payment structure, with maturity set for October 6, 2037.
- FXD1/2022/025 will mature on September 23, 2047, with its final coupon payment scheduled for March 25, 2047.
Looking ahead, CBK has announced plans for further Treasury bond issuances in May 2025. The details, including tenors, coupon rates, and terms, will be outlined in a prospectus set to be released ahead of the next auction.
