The Central Bank of Kenya (CBK) has raised KES 71.6 billion through a reopened Treasury bond auction dated June 23, 2025, significantly surpassing its KES 50.0 billion target. The strong subscription highlights a growing investor shift toward long-term government securities amid declining short-term yields following the lowering of Central Bank Rates (CBR) rates by CBK by 25.0 bps to 9.75% in June 2025 from 10.00% in April 2025.
The dual-tranche offering comprised the 15-Year Fixed Coupon Treasury Bond (FXD1/2020/015) and the 30-Year Savings Development Bond (SDB1/2011/030), which now carry tenors to maturity of 9.7 years and 15.7 years, respectively. The bonds bear fixed coupon rates of 12.8% and 12.0%.
Investor demand was robust, with total bids amounting to KES 101.4 billion translating to a subscription rate of 202.7%. The government accepted KES 71.64 billion, representing an acceptance rate of 70.7%.
The weighted average yields for successful bids came in at 13.5% for FXD1/2020/015 and 14.0% for SDB1/2011/030. These were notably higher than the 12.5% and 13.8% yields recorded during their last reopening in September 2020 and September 2014, respectively.
With inflation easing to 3.8% as of May 2025, the real returns on the reopened bonds are particularly attractive estimated at 9.7% for FXD1/2020/015 and 10.2% for SDB1/2011/030. When adjusted for tax, these bonds offer tax-equivalent yields of approximately 14.3% and 14.8%, respectively, with the 10.0% withholding tax applied to long-term instruments compared to 15.0% on shorter-term ones.
The outcome of this auction outlined a shift in investor preference toward longer-dated securities, driven by compelling real returns, higher nominal yields, and easing liquidity conditions in the market.
