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CBK raises Sh100bn from February bonds on massive oversubscription
Bonds are now paying a significant rate premium on Treasury bills, whose yields stood between 7.7 percent and 9.2 percent after last week’s auction, incentivising investors to go for the longer papers.
Investors offered the government Sh213.74 billion in the February 2026 Treasury bond issuance, after the latest rate cut by the Central Bank of Kenya (CBK) sparked a rush to lock in the returns of between 12.34 percent and 13.4 percent available from the reopened papers.
This is the highest volume the market has seen in bids outside of infrastructure bonds, underlining the expectations in the markets that returns from government securities will fall further in the near term after the CBK lowered its base rate to 8.75 percent from nine percent on Tuesday.
The bond sale, which closed on Wednesday, saw the government reopen a 15-year paper first issued in 2019, and a 25-year bond that was initially auctioned in 2018, with a combined target of Sh50 billion.
The 15-year bond pays an annual interest (coupon) of 12.34 percent and the 25-year bond 13.4 percent, translating to net annual returns of 11.1 percent and 12.06 percent respectively, once the interest is levied a 10 percent withholding tax.
Bids on the 15-year paper amounted to Sh133.79 billion, with the CBK accepting Sh54.79 billion, while the 25-year bond raised offers of Sh79.94 billion, with Sh45.75 billion taken up by the government. In total, the bond issuance raised Sh100.53 billion.
The domestic rate cuts have pushed investors to go for bonds that have relatively high yields in the primary market, regardless of tenor. Previously, long-term securities such as the reopened 25-year paper were the preserve of institutional investors such as pension funds, while banks and retail investors waited for shorter-dated papers.
Bonds are now paying a significant rate premium on Treasury bills, whose yields stood between 7.7 percent and 9.2 percent after last week’s auction, incentivising investors to go for the longer papers.
The race to lock in the higher-paying securities has opened a window for the government to lengthen its domestic debt maturity profile without compromising the performance of primary bond sales.
In the last six months, the CBK has reopened a succession of 15-year, 20-year and 25-year bonds that were floated between 2018 and 2022, towards this goal of cutting short-term refinancing pressure.
The February pair has also been reopened recently. The 15-year bond was last offered to investors in November 2025, raising Sh20.18 billion from bids of Sh33.1 billion.
Its outstanding amount will now jump to Sh108.71 billion after the latest sale.
The 25-year bond was meanwhile reopened most recently in July 2025, when it raised Sh36 billion from offers of Sh43.8 billion.
In the February 2026 reopening, the bond, which had an outstanding value of Sh165.65 billion, now goes up to Sh211.4 billion.
This gives it the second-highest outstanding value of any bond currently in issue, only behind a seven-year infrastructure paper floated in 2023, which has a face value of Sh213.25 billion.
