The Central Bank of Kenya (CBK) has invited investors to participate in an auction for a KSh75 billion Treasury bond switch.
According to CBK, the offer enables eligible holders of certain Treasury bills and an existing Treasury bond to exchange all or part of their holdings for a new Treasury bond.
The switch includes Treasury bills with issue numbers 2685/091, 2646/182 and 2574/364, together with Treasury bond FXD1/2012/015.
“Only investors with unencumbered holdings in Treasury bond issue number FXD1/2012/15 and Treasury bills 2685/091, 2646/182 and 2574/364 as at August 24, 2026,” the prospectus read.
These securities are to be switched into Treasury bond FXD4/2019/010. The CBK prospectus assigns a value of KSh15 billion to each of the five securities listed, making the total amount involved in the switch KSh75 billion.
Who Can Participate in the CBK Switch
According to the prospectus, participation is voluntary and is limited to investors who hold unencumbered amounts of Treasury bond FXD1/2012/015 and Treasury bills 2685/091, 2646/182 and 2574/364.
Eligible investors can exchange either part or the whole of the face value of their holdings. The auction will use a multi-price system, with competitive bids requiring a minimum of KSh2 million per Central Securities Depository (CSD) account for each tenor. Non-competitive bids must range from KSh50,000 to KSh50 million.
The Treasury bills in question mature on September 7, 2026. The FXD1/2012/015 Treasury bond matures on September 6, 2027, and has a coupon rate of 11 percent. The Treasury bills have no coupon rate and are subject to a 15 percent withholding tax, while the existing Treasury bond is subject to a 10 percent withholding tax.
Details of the New Treasury Bond
The destination Treasury bond, FXD4/2019/010, has a coupon rate of 12.28 percent and will mature on November 12, 2029.
It is subject to a 10 percent withholding tax, with its price determined through the multi-price auction based on the yield submitted by investors.
The sale period runs from July 30 to August 24, 2026, with bids required by 10 a.m. on August 24. Settlement is scheduled for August 26, 2026.
CBK stated that successful bidders can view their allocation details through the DhowCSD Investor Portal or App under the Bids tab. The Central Bank reserves the right to accept applications in full or in part, or reject them entirely.
Settlement, Liquidity and Rediscounting
Following settlement, allocated amounts will be added to investors’ portfolios, while any remaining cash below the KSh50,000 minimum investment amount will be refunded on August 26, 2026.
CBK may rediscount the bonds as a last resort at 3 percent above the prevailing market yield or coupon rate, whichever is higher. Investors seeking rediscounting must submit instructions through the DhowCSD Investor Portal or App by selecting the Instructions tab, followed by Create New and Rediscount.
“The Central Bank will rediscount bonds as a last resort, at 3% above the prevailing market yield or coupon rate whichever is higher.”
The destination bond may be reopened at a future date. The bonds also qualify for statutory liquidity ratio requirements applicable to commercial banks and non-bank financial institutions under the Banking Act, Cap 488.
Investors with outstanding pledges on eligible holdings must cancel them five days before the switch settlement date to qualify. CBK has advised investors seeking further information to contact its Financial Markets Department, branches and currency centers, commercial banks, investment banks or stockbrokers.
Coupon Payment Schedule
The FXD1/2012/015 bond has coupon payment dates on September 7, 2026, March 8, 2027 and September 6, 2027.
For the FXD4/2019/010 bond, coupon payments are scheduled for November 16, 2026; May 17 and November 15, 2027; May 15 and November 13, 2028; May 14, 2029; and November 12, 2029.
The CBK prospectus sets out the terms governing the voluntary switch, including eligibility, bidding, allocation, settlement and liquidity arrangements.
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