The Government has stepped back into the local bond market with a March reopening of two long-term Treasury bonds, even as domestic borrowing edges close to its full-year target.
By the close of December 2025, net cumulative domestic financing stood at KSh 554.96 billion, about 87 per cent of the FY2025/26 ceiling of KSh 634.75 billion. The latest move features reopenings of the 2039 and 2046 bonds, alongside a bond switch that allows investors to exchange short-dated paper for longer tenors.
Taken together, the twin operations signal a pivot away from raising fresh deficit funding and toward fine-tuning the maturity structure and refinancing risk of existing domestic debt.
Since July 2025, the Central Bank of Kenya has conducted 11 bond reopenings, offering KSh 540 billion and accepting KSh 746.35 billion out of total bids worth KSh 1.38 trillion. Net borrowing from these reopenings amounts to KSh 626.42 billion, with only limited redemptions. Robust appetite, particularly for longer-dated instruments, has enabled Treasury to lengthen duration while maintaining funding momentum.
March 2026 Treasury Bond Reopening
| Item | Details |
|---|---|
| Bonds | FXD1/2019/020 and FXD1/2021/025 |
| Amount Targeted | KSh 60Bn |
| FXD1/2019/020 | 13.1 years remaining, 12.8730% coupon. Maturity: 21 March 2039 |
| FXD1/2021/025 | 20.1 years remaining, 13.9240% coupon. Maturity: 9 April 2046 |
| Auction Date | 11 March 2026 |
| Settlement Date | 16 March 2026 |
Alongside the reopening, Treasury has rolled out a bond switch aimed squarely at easing near-term redemption pressure. Investors holding paper maturing in November 2026 are being offered the option to migrate into a longer-dated security, smoothing the repayment curve without expanding net borrowing. This marks the fourth bond switch on record and the second undertaken in 2026.
March 2026 Treasury Bond Switch
| Item | Details |
|---|---|
| Switch Size | KSh 15Bn |
| Source Bond | FXD1/2021/005 |
| Source Bond Terms | 0.6 years remaining, 11.2770% coupon |
| Source Bond Maturity | 9 November 2026 |
| Destination Bond | FXD3/2019/015 |
| Destination Bond Terms | 8.3 years remaining, 12.3400% coupon |
| Destination Bond Maturity | 10 July 2034 |
| Auction Date | 16 March 2026 |
| Settlement Date | 18 March 2026 |
| Record | 4th switch on record, 2nd in 2026 |
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The wider fiscal backdrop sheds light on the strategy. The FY2025/26 deficit is projected at roughly KSh 923 billion, with domestic markets expected to contribute about KSh 635 billion in net financing. By mid-year, most of that domestic envelope had already been utilised, while external net financing remained subdued amid sizeable repayments and slower concessional inflows. Talks with the IMF continue over a new programme, and Treasury has indicated that a Eurobond issuance remains an option.
With domestic borrowing largely aligned to budget plans, the March exercises underline a clear objective: stretch maturities, temper refinancing spikes, and keep the debt profile steady as the fiscal year enters its final stretch.
