The Central Bank of Kenya (CBK) raised KSh8.45 billion from a tap sale of two long-term Treasury bonds on June 15, securing just over half of the KSh15 billion target and extending a streak of weakening demand in the government securities market.
The tap sale featured the 15-year FXD1/2020/015 bond and the 25-year FXD1/2018/025 bond, both of which had previously been offered during the June 8 primary auction. That auction raised KSh34.38 billion against a KSh40 billion target, translating to a performance rate of 85.97%.
The 15-year bond received bids worth KSh6.12 billion, of which KSh5.95 billion was accepted, while the 25-year bond attracted KSh2.64 billion in bids, with KSh2.50 billion accepted.
CBK retained the average accepted yields from the June 8 auction, pricing the 15-year paper at 13.3120% and the 25-year bond at 14.2304%.
The tap sale achieved a performance rate of 56.31%, making it the weakest bond market operation recorded during the 2025/26 financial year. The result marks a notable decline from the 85.97% performance registered on June 8 and the 94.32% achieved during the May 20 auction.
The three successive underperformances highlight a clear slowdown in investor demand for long-dated government securities at current yield levels. Market analysts suggest the trend reflects more than end-of-financial-year liquidity constraints, signalling a broader reassessment of risk and return expectations among investors.
Also Read: Diesel Price Drops by KSh10 After Gov’t Injects KSh10 Billion Fuel Subsidy
Traditionally, CBK uses tap sales to absorb excess demand following heavily oversubscribed auctions. For instance, in August 2025, a KSh90 billion bond offer attracted bids worth KSh323.43 billion, prompting the regulator to launch a tap sale that raised an additional KSh179.77 billion.
However, applying the same strategy to bonds that had already attracted below-target demand produced a less favourable outcome.
Despite the weak uptake, cumulative net bond borrowing by the government for the 2025/26 financial year has reached approximately KSh933.85 billion. The amount has been raised through 17 Treasury bond auctions and one tap sale conducted since July 2025.
The government still has two debt market operations outstanding before the close of the fiscal year. CBK is currently seeking KSh60 billion through a dual-tranche reopening of the 20-year FXD1/2018/020 bond and the 25-year FXD1/2021/025 bond. Bids for the offer close on June 17, with settlement scheduled for June 22, just days before the end of the 2025/26 financial year on June 30.
