The National Treasury has announced a KSh30 billion bond buyback programme targeting a 2023 issue, in a strategic move to ease next year’s domestic debt pressure.
The buyback focuses on the FXD1/2023/003 bond, which carries a 14.228 per cent coupon rate, making it one of the most expensive debts on the government’s books.
As of this month, the bond’s outstanding value stands at KSh76.5 billion and was originally set to mature in May 2026 just over five months away.
In a notice issued on Monday, the Central Bank of Kenya (CBK) invited investors holding the bond to tender part or all of their holdings for early repurchase.
“Treasury bonds bids must be submitted to the Central Bank electronically via CBK DhowCSD by 10am on Monday, November 17, 2025,” the notice read.
The buyback, capped at KSh30 billion, is voluntary, reflecting the Treasury’s intent to retire part of the bond before maturity and reduce short-term refinancing risks.
Analysts say the move is part of the government’s plan to flatten its near-term redemption curve and prevent a potential cash crunch in the 2025/2026 financial year.
Projections already show interest payments alone could exceed KSh1 trillion during the period underscoring the pressure on public finances.
Under the buyback terms, investors will submit competitive bids indicating their preferred yields. CBK will use a multi-price auction model to determine the accepted offers.
An indicative pricing table shows clean prices ranging from 100.5 at a 13 per cent yield to 103.6 at a 6.25 per cent yield, meaning investors could sell above par depending on market demand.
CBK also directed investors with pledged holdings to release their lien positions five days before the auction to be eligible for participation.
Successful bidders will be notified through the DhowCSD Investor Portal on Monday, November 17, while payments will be processed on Wednesday, November 19, 2025.
