The Central Bank of Kenya (CBK) has successfully concluded a strategic switch auction, facilitating the migration of KES 18.40 billion from a nearing-maturity Treasury bond to a longer-dated security. The auction, which aimed to voluntarily switch holdings from the five-year FXD1/2021/005 bond to the 15-year FXD3/2019/015 bond, recorded a robust performance rate of 148.06%.
Investor interest significantly outpaced the government’s initial requirements. Against an offer of KES 15.00 billion, the CBK received total bids worth KES 22.21 billion at cost. In a move to optimize the national debt profile, the CBK accepted KES 18.40 billion, maintaining a bid-to-cover ratio of 1.21. The accepted bids comprised KES 17.72 billion in competitive bids and KES 679.48 million in non-competitive bids.
The destination bond, FXD3/2019/015, which currently has 8.3 years remaining to maturity, achieved a weighted average rate of 11.5887% for the accepted bids. This rate was notably lower than the broader market weighted average of 11.6936%. The paper was priced at 105.8783 per KES 100 at the average yield, while carrying a fixed coupon rate of 12.3400%.
For comparison, the source bond (FXD1/2021/005) had only 0.6 years remaining to maturity and was quoted at a yield of 8.0935% with a dirty price of 105.9143.
This switch auction is a critical component of Kenya’s Medium-Term Debt Management Strategy (MTDS), which seeks to reduce refinancing risks by lengthening the average time to maturity of the domestic debt portfolio. By successfully moving investors from a bond maturing in November 2026 to one maturing in July 2034, the National Treasury has effectively deferred a significant repayment obligation.
Successful bidders will see their portfolios updated on the settlement date of Wednesday, March 18, 2026. The CBK has noted that any remaining cash from bids that fell below the minimum investment threshold of KES 50,000.00 will be refunded to investors on the same day.
The strong performance of this switch auction, following the high oversubscription of the primary March bond auction, underscores sustained investor confidence in the government’s long-term fiscal instruments. These securities qualify for statutory liquidity ratio requirements and can be pledged as collateral for loans from regulated financial institutions.
