The Central Bank of Kenya (CBK) has launched a Ksh 50 billion buyback of three treasury bond issues in a move aimed at managing public debt obligations and enhancing liquidity in the bond market. The buyback targets investors holding bonds maturing in 2025, marking a significant shift in Kenya’s debt restructuring approach.
The buyback program, which runs from February 7 to February 17, 2025, is open to investors holding FXD1/2022/003, FXD1/2020/005, and IFB1/2016/009 bonds. This initiative allows bondholders to voluntarily offload their holdings back to the government through a multi-price reverse auction, with payments scheduled for February 19, 2025.
The targeted bonds have a combined outstanding amount of Ksh 185.05 billion, with coupon rates ranging from 11.667% to 12.5%. Investors participating in the buyback must have unencumbered holdings as of February 17, meaning bonds pledged as collateral must be released five days before the transaction date.
The move signals the CBK’s effort to reduce short-term debt pressure while offering investors an early exit option from bonds nearing maturity. Analysts suggest that this could also improve liquidity in the secondary bond market, creating room for fresh issuances to fund government projects.
“This buyback allows the government to ease its upcoming redemption burden while providing an opportunity for investors to adjust their portfolios,” a fixed-income analyst based in Nairobi commented.
Interested investors must submit bids electronically via the CBK DhowCSD platform by 10:00 AM on February 17, 2025. The process follows standard competitive and non-competitive bid structures, with minimum bid amounts set at Ksh 2 million for competitive bids and Ksh 50,000 for non-competitive bids.
All successful bidders should obtain details of successful bids from the DhowCSD Investor Portal/App under the transactions tab on Monday, February 17, 2025. The bidders will receive payment in cash on February 19, 2025.
Market observers note that the buyback could influence bond pricing and yields in the secondary market. Investors are advised to use the CBK’s bond secondary market calculator to determine indicative prices.
As Kenya grapples with a rising debt load, initiatives like this buyback could set a precedent for future debt management strategies. With an expected budget deficit of Ksh 700 billion in 2025, experts predict more measures to restructure public debt and manage borrowing costs.
Investors who have pledged their holdings as collateral must cancel their contracts at least five days before the buyback value date to qualify for participation in the auction, the Central Bank of Kenya (CBK) has announced. Additionally, the CBK retains the discretion to accept or reject applications—either in full or in part—without providing any specific reasons.
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