While the reopening of long-dated bonds by the Central Bank of Kenya—offering up to 14.18% interest on a 25-year tenor— looks appealing for investors, a more critical view suggests that it may represent both a short-term borrowing relief and a deeper fiscal pitfall for Kenya’s future.

High Interest, High Stakes

• Yes, investors are drawn by yields as high as 14.18% (25-year) and 13.2% (20-year), with competitive and accessible options.

• But this also signals that Kenya faces mounting pressure to offer steep returns to attract capital—hinting at underlying economic fragility.

Debt Sustainability at Risk

• Kenya recently saw record-breaking bids—KSh 323 billion for infrastructure bonds against a KSh 90 billion offer. Yet, only KSh 95 billion was accepted, and much of it was used just to repay maturing debt—net new borrowing: KSh 375 million.

• In other words, the auction was less about funding new projects and more about rolling over obligations, raising concerns about the effectiveness of this as a funding strategy.

A Deepening Debt Trap?

• Heavy dependence on long-term, high-interest domestic debt could exacerbate Kenya’s debt burden—particularly when the country is also exploring debt buybacks and issuance of longer-dated bonds to manage staggering maturities (KSh 495 billion in 2025 and nearly double in 2026) Reuters.

• Offering such high yields might be a signal that investors are demanding a premium for bearing elevated risk—reflecting diminished confidence in economic fundamentals.