Kenya has launched its largest ever infrastructure bond offer, seeking to raise KSh150 billion as Treasury officials intensify domestic borrowing efforts to finance key development projects.

In a market update on Thursday, the Central Bank of Kenya (CBK) has reopened three long-dated securities signaling President William Ruto's administration to seek local resources to plug budget deficit.

The latest bond sale, which opened on Thursday, July 30, is projected to close on 12 August and far surpasses August 2025 auction that hit a high of KSh90 billion.

Statistics show that by mid-August, the Central Bank will have advertised KSh 260 billion in bond sales in the current fiscal year. This represents roughly 26.1 percent of Kenya Kwanza administration's target domestic borrowing which is capped at KSh995.7 billion. In FY2025/26, the Treasury raised KSh 961.7 billion from the domestic market.

Maturity

CBK's latest offer includes the reopening of 16-year tenor IFB/2019/016 bond that now has 9.3 years to maturity. The Treasury has also reopened IFB1/2021/018, a 18-year tenor bond that has 12.7 years to hit maturity. Also in the latest offering is IFB1/2021/021, a 21-year tenor with 16.2 years to maturity.

CBK said the three bonds carry fixed coupon rates of 11.75 percent, 12.667 percent, and 12.737 percent respectively, with returns exempt from withholding tax, a feature that has historically strengthened demand for infrastructure paper.

The bonds have been structured with an amortisation feature, providing partial principal repayment before final maturity. 

Half of the principal on IFB1/2019/016 and IFB1/2021/018 will be redeemed in 2030, while IFB1/2021/021 will repay 50 percent in September 2031. The remaining amounts will be settled at their respective final maturities in 2035, 2039, and 2042.

Repayment structure

This repayment structure is modelled to help reduces the bullet repayment burden at final maturity while also creating sizable redemption obligations around 2030 and 2031.

The CBK has opened the auction to both competitive and non-competitive bidders. Non-competitive bids range from a minimum of KSh 50,000 to a maximum of KSh 50 million, while competitive bids require a minimum of KSh 2 million per Central Securities Depository account per tenor.

Settlement is scheduled for August 17, 2026, with secondary trading in multiples of KSh 50,000 commencing on the same day. The bonds will be listed on the Nairobi Securities Exchange.

The government expects domestic financing to cover most of its KSh1.112 trillion fiscal deficits for the current financial year, with infrastructure bonds playing a crucial role in this strategy.

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