The Central Bank of Kenya (CBK) has opened the sale of the February Treasury bond, with investors keeping an eye on yields ahead of a potential rate cut in next month’s monetary policy committee meeting.
The sale, which closes on February 11, has seen 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 raising Sh50 billion.
The 15-year bond has a period to maturity of 8.4 years and pays an annual interest (coupon) of 12.34 percent, while the 25-year bond carries a coupon of 13.4 percent and remaining tenor of 17.3 years.
Besides the MPC rate decision on February 10, investors will be keeping an eye on the government’s signal on its borrowing plans for the second half of the fiscal year, where an upward revision in the target could provoke demands for higher interest rates despite the CBK’s monetary easing stance.
“Yield triggers may include this week’s Federal Reserve meeting, the February MPC meeting, external financing pipeline conversion, and a supplementary fiscal budget,” said analysts at NCBA Investment Bank in a fixed income note published on Monday.
The last MPC meeting in December saw the CBK lower the base rate by 0.25 percentage points to nine percent, this being the ninth successive rate cut since August 2024 when the rate stood at 13 percent.
Externally, the US Fed made a third straight benchmark rate cut of 0.25 percentage points to a range of 3.5 percent and 3.75 percent in its mid-December meeting. Analysts at JP Morgan Global Research however expect the US central bank to hold the rate steady this year despite pressure from the White House to make further cuts, citing recent stabilisation in the country’s unemployment rate.
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 retain 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 thus 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.
It was sold alongside a reopened 25-year bond from 2022, which netted Sh34.57 billion from offers worth Sh82.14 billion.
The 25-year bond was meanwhile reopened most recently in July 2025, alongside a 20-year paper whose initial issuance date was 2018.
It raised Sh36 billion from offers of Sh43.8 billion, while the 20-year bond netted Sh30.6 billion from bids of Sh33 billion.
