The Central Bank of Kenya (CBK) has raised its weekly borrowing target from the short-dated Treasury bills to Sh28 billion after a spike in domestic borrowing requirements for the 2026/27 fiscal cycle.
The apex bank has raised the weekly auctions target from Sh24 billion, raising its haul from the short-term securities as net domestic borrowing for the period to June 30, 2027, rises to Sh1.03 trillion from Sh994.8 billion previously.
Sources within financial markets and close to the CBK reckon the enhanced T-bills cash goal has stemmed from the higher domestic borrowing target for the current fiscal year.
CBK has targeted Sh28 billion in each of its last two weekly T-bill auctions, with a higher quantum placed on the shortest dated 91-day paper at Sh8 billion from Sh4 billion previously.
The CBK could, however, stagger the higher cash target from T-bills across tenures to include enhancing targets for the 182-day and 364-day Treasury bills according to the sources.
The higher target placed on the weekly Treasury bills sold has raised the pool of cash possible from the short-dated papers by up to Sh208 billion a year.
The decision to enhance the target is believed to be guided by the apex bank in coordination with the National Treasury’s Public Debt Management Office (PDMO).
“The raised target likely speaks to the increased domestic borrowing target for the 2026/27 financial year,” said Churchill Ogutu, the Head of Research at Capital A Investment Bank.
CBK primarily deploys T-bill auctions as a tool to manage liquidity in the financial system, controlling the amount of money circulating in the economy.
T-bills are, however, tapped to also cover immediate, short-term budget deficits and manage cash flow needs before long-term tax revenues are collected.
The National Treasury has largely avoided raising domestic debt from T-bills to avoid short-term refinancing risks and has instead prioritized the issuance of long dated bonds to prolong maturities.
Data from CBK placed the share of Treasury bills as a percentage of total domestic securities at 15.71 percent on July 10, 2026, or Sh1.12 trillion.
Treasury bonds were 84.29 percent of the securities or Sh6.02 trillion in the same period.
The share of T-bills to total securities is expected to fluctuate between 15 and 20 percent as the National Treasury is widely projected to hold its bias for bonds over T-bills even as it adjusts its cash target from the discount securities.
“The share of T-bills as a percentage of total domestic debt securities usually oscillates depending on upcoming maturities. The Treasury would still be looking at lengthening the maturity profile for domestic debt,” added Mr Ogutu.
CBK’s last two T-bill auctions have both raised the quantum of the 91-day paper from Sh4 billion to Sh8 billion.
Both auctions were oversubscribed with investors marking the largest interest under the shortest maturing paper as they hold a wait and see stance on the direction of domestic interest rates as the inflation trend remains uncertain.
Last week’s T-bill auction saw bids of Sh44 billion against the revised Sh28 billion target, where the 91-day paper recorded bids of Sh24.3 billion.
CBK accepted Sh30.6 billion from the auction.
The apex bank has also doubled down on Treasury bond issuances at the start of the 2026/27 fiscal year.
CBK has staged three auctions in a rare showing, raising Sh70.5 billion so far from three re-opened term bonds, a 10-, 20-and 30-year paper, after receiving bids of Sh144.4 billion against a target of Sh70 billion.
The apex bank, however, undershot its switch-bond target as it transferred maturities of Sh7.95 billion from a five-year paper set to mature in November 2026, to a 20-year paper maturing in November 2032.
The switch bond slightly underperformed its target of transferring maturities of Sh10 billion.
CBK’s third bond auction in July, whose sale ends on Wednesday, targets Sh40 billion from the reopening of a 20-year and 25-year paper which have 12.8 and 21.4 years to maturity.
The rapid bond sales at the start of the fiscal year are seen as an attempt at frontloading the domestic borrowing ambitions for the fiscal year as revenue mobilisation starts on a slower note.
“This is potentially to make up for the lack of significant revenues at the beginning of the fiscal year,” said Churchill Ogutu.
Domestic borrowing is expected to account for the lion’s share of deficit financing for the 2026/27 cycle at Sh1.03 trillion.
The target for net foreign financing over the same period sits at a modest Sh116.2 billion.
The higher target for net domestic financing mirrors difficulties in mobilizing funding from external sources including cost jitters and protracted discussions with concessional sources like the International Monetary Fund (IMF).
