The Central Bank of Kenya (CBK) has launched a second bond buyback program aimed at reducing pressure from looming domestic debt maturities. The initiative involves the partial repurchase of a Sh76.5 billion bond that is set to mature in May next year, marking another step in the government’s broader plan to manage debt sustainably. CBK has invited bondholders to voluntarily sell back part or all of their holdings for early redemption of up to Sh30 billion, with the auction scheduled to close on November 17.
This comes months after the first buyback in February, when the bank redeemed Sh50 billion worth of bonds maturing between April and May. The move helped the exchequer ease short-term cash demands while maintaining liquidity for other government obligations. The latest buyback will be financed through the ongoing sale of reopened 15-year and 20-year Treasury bonds targeting Sh40 billion, with auctions running until November 5.
According to the CBK, the targeted bond carries an interest cost of 14.23 percent. The bank intends to replace it with lower-cost papers, including the 20-year bond with a 12 percent coupon and the 15-year bond at 13.94 percent. This strategy aims to cut debt servicing costs and smoothen the redemption profile by converting near-maturity, high-interest debt into long-term, lower-yielding securities.
The early redemption aligns with a wider liability management plan outlined in the Treasury’s 2025/26 borrowing calendar. The plan includes five more domestic bond buybacks, such as Sh103.4 billion maturing in August 2026 and Sh144.5 billion due in September 2027. Treasury officials have emphasized that these operations, alongside switch auctions, are designed to reduce refinancing risks and strengthen debt sustainability by ensuring an “optimal mix of instruments.”
Under this approach, buybacks allow the government to retire costly debt before maturity, while switch auctions enable investors to roll over payouts into longer-term bonds. The Treasury maintains that this blended strategy will not only lower interest costs but also enhance investor confidence. It signals Kenya’s determination to actively manage its debt obligations rather than simply rolling them over at prevailing market rates, which are often high and unpredictable.
