Kenya Plans New Trading Platform to Strengthen Domestic Debt Market

Kenya plans to establish an over-the-counter trading platform for government securities as part of reforms designed to strengthen the domestic debt market and improve the management of public borrowing.

The proposal appears in the draft 2027 Medium-Term Debt Management Strategy published on the National Treasury’s website. The Public Debt Management Office said the move forms part of broader efforts to improve the public debt management framework and develop the local market.

The electronic platform would support the buying and selling of government securities after their initial issuance. It is intended to improve access to pricing information, make trading more efficient, and help investors sell their holdings before maturity.

Over-the-counter trading allows buyers and sellers to negotiate transactions outside an exchange’s central order book. Developing this channel could give investors greater flexibility when managing their portfolios and encourage more participation in government debt trading.

Kenya’s annual borrowing plan for the 2026/27 financial year identifies improved price discovery and stronger secondary market liquidity as key objectives of the platform. Price discovery helps buyers and sellers establish the market value of securities, while liquidity reflects how easily those securities can be traded.

The Treasury also plans to introduce a pilot market-making framework. Market makers provide buying and selling prices, helping investors find counterparties and supporting more consistent trading activity.

The draft strategy envisages conducting the pilot using a limited selection of benchmark bonds after the over-the-counter market has been established. The Public Debt Management Office, the Central Bank of Kenya, and the Capital Markets Authority are identified as responsible institutions.

The reforms also aim to support a reliable benchmark yield curve, which shows the returns investors demand for government securities across different maturities. This provides a reference for pricing borrowing elsewhere in the economy.

The trading initiative accompanies a broader shift towards domestic financing. Under the draft strategy, Kenya targets 79 percent of gross borrowing from domestic sources and 21 percent from external sources over the medium term.

The government also intends to gradually reduce its stock of short-term Treasury bills while increasing issuance of medium- and long-term Treasury bonds. Extending debt maturities would reduce the frequency with which the government must refinance its obligations.

Another planned reform is the full operationalization of the Registrar of National Government Securities.

Together, these measures are intended to improve the functioning of Kenya’s debt market as the government seeks to balance its financing needs with borrowing costs and repayment risks.