Kenya's Treasury has initiated a Ksh30 billion buyback of a 2023-issued bond to reduce domestic debt pressures ahead of its 2026 maturity. The move targets the high-interest FXD1/2023/003 bond, which carries a 14.228 per cent coupon. This action aims to smooth the government's redemption schedule amid rising debt servicing costs.
On November 10, 2025, the Central Bank of Kenya (CBK) invited investors to tender their holdings in the FXD1/2023/003 bond, issued in 2023 and maturing in May 2026. The bond, with an outstanding stock of Ksh76.5 billion and a 14.228 per cent coupon, represents one of the government's costlier liabilities. The buyback, capped at Ksh30 billion, is voluntary and seeks to retire portions early to flatten the near-term redemption curve and prevent a cash-flow buildup in the 2025/2026 fiscal year.
Bids must be submitted electronically via CBK's DhowCSD by 10am on November 17, 2025. Investors will offer competitive bids based on preferred yields, with CBK using a multi-price auction to allocate offers. Indicative pricing shows clean prices from 100.5 at a 13 per cent yield to 103.6 at a 6.25 per cent yield, allowing potential exits above par.
Holders with pledged positions must release liens five days before the auction. Successful bidders will access details via the DhowCSD Investor Portal on November 17, with payments following on November 19.
This initiative comes as public debt servicing costs are projected to exceed Ksh1 trillion in interest payments alone for the 2025/2026 fiscal year. Kenya's total public debt stands at Ksh12.05 trillion, with domestic debt comprising 55.3 per cent, or Ksh6.66 trillion. Experts view the buyback as a strategic step to manage fiscal pressures.