The Central Bank of Kenya’s (CBK) sixth bond switch auction has attracted KSh 7.61 billion in bids against a KSh 10 billion target, achieving a 76.14% subscription rate. While this reflects an improvement from April’s sharply underwhelming performance, the results still fall short of the strong oversubscriptions seen earlier in 2026.
CBK accepted KSh 4.53 billion in total, with KSh 4.31 billion of the source bond FXD1/2017/010 (maturing July 2027) being switched into FXD1/2021/020, which matures in July 2041.
This round stood out for offering more attractive terms than previous switches this year. The destination bond carries a 13.444% coupon, higher than the 12.966% on the source bond, effectively giving investors a 48 basis point uplift instead of the typical yield sacrifice seen in earlier operations.
Key outcome metrics were as follows: bids totalled KSh 7.61 billion, with a 76.14% performance rate, a bid-to-cover ratio of 1.68x, and an average accepted yield of 13.41%. The accepted price stood at KSh 103.85 per KSh 100, with KSh 4.31 billion successfully switched.
By comparison, April’s switch attracted only KSh 2.56 billion in bids and a 12.8% performance rate after offering significantly less favourable terms.
Although improved pricing boosted participation, it was still insufficient to fully clear the offer. A large portion of uptake came from non-competitive bids, which accounted for KSh 3.31 billion, or roughly 73% of accepted volume. Competitive bids from larger institutional investors contributed only KSh 1.22 billion.
The broader pattern shows mixed investor appetite across recent switches. Earlier operations in January and March 2026 were heavily oversubscribed, while April and May have shown weaker demand, particularly from institutional holders.
Market behaviour suggests that investors holding bonds close to maturity are increasingly opting to wait for redemption rather than extend duration significantly, even when offered higher coupons. With the Central Bank Rate at 8.75% and short-dated yields remaining relatively stable, the incentive to roll over into long-dated paper appears limited.
CBK is expected to continue with further issuance activity in June, including a planned KSh 50 billion reopening of FXD3/2019/015 and FXD1/2021/020.
