Kenya Fixed Income Market Update – 21 November 2025

T-Bills Primary Auction

T-bills remained firmly oversubscribed for the seventh consecutive week, signaling persistent investor confidence in short-term government securities amid a stable interest rate environment. The overall subscription rate rose sharply to 180.9%, up from 127.3% the previous week.

Investor preference leaned heavily toward the short end of the curve:

• 91-day paper: 336.6% subscribed (Kshs 13.4bn bids vs Kshs 4.0bn offered) — up from 163.5% the prior week; yield declined marginally by 0.6 bps to 7.78%.
• 182-day paper: Subscription rose to 42.3% (from 36.9%); yield inched up by 0.7 bps to 7.80%.
• 364-day paper: Subscription climbed to 257.3% (from 203.1%); yield increased by 2.2 bps to 9.38%.

The government accepted Kshs 43.39bn of the Kshs 43.42bn bids received, reflecting a 99.9% acceptance rate. The shift toward the 1-year paper suggests investors are locking in yields ahead of potential moderation in rates following recent monetary policy easing and anchored inflation at 4.6%.

Primary Bond Market

The CBK successfully concluded two major bond issuances during the week, reflecting strong market appetite across maturities:

🏦 Reopened Treasury Bonds – FXD3/2019/015 & FXD1/2022/025

• Subscription: Oversubscribed at 289.6%, receiving Kshs 115.9bn bids vs Kshs 40.0bn offered.
• Accepted Amount: Kshs 54.8bn (acceptance rate 47.3%).
• Weighted Average Yields:
  • FXD3/2019/015 (8.7 years): 12.6% (up from 12.3% in Oct 2021)
  • FXD1/2022/025 (21.9 years): 13.7% (down from 14.1% in Sept 2025)

The demand underscored renewed investor confidence in medium- and long-dated papers, with the market reacting positively to stable macro indicators and the government’s prudent debt management approach.

At the prevailing October inflation rate of 4.6%, the real returns stood at 8.0% (FXD3/2019/015) and 9.1% (FXD1/2022/025), translating to tax-equivalent yields of 13.3% and 14.6% respectively—highlighting attractive real income prospects for investors.

🔁 Buyback Bond Issue – FXD1/2023/003

The CBK also executed its second bond buyback operation of 2025, targeting FXD1/2023/003 (coupon 14.2%, 0.6-year tenor).

• Subscription: 114.3%, slightly higher than the previous 112.2%.
• Accepted Amount: Kshs 20.1bn (acceptance rate 58.5%).
• Weighted Average Yield: 7.8%, aligning closely with short-term T-bill yields, thus maintaining refinancing cost neutrality.

The buyback reflects the government’s active debt management strategy aimed at smoothing maturity profiles and reducing refinancing risks as part of its fiscal stabilization agenda.

Liquidity Conditions

Market liquidity tightened slightly, with the average interbank rate rising by 0.5 bps to 9.2%, as tax remittances temporarily offset government disbursements.
Interbank volumes traded declined by 28.2% to Kshs 10.0bn, from Kshs 13.9bn the prior week, signaling marginal pressure in short-term funding markets.

Eurobond Market

Kenya’s Eurobonds posted moderate yield increases, mirroring global risk adjustments:

• The 13-year 2021 issue rose by 12.8 bps to 8.6%, reflecting cautious sentiment amid a stronger US dollar and shifting investor positioning in frontier debt markets.
  Nonetheless, spreads remain anchored by favorable macro stability and robust foreign exchange reserves, providing room for yield stabilization in coming weeks.

Kenya Shilling & Forex Reserves

The Kenya Shilling weakened slightly by 45.1 bps to Kshs 129.9 per USD, from Kshs 129.3 the prior week.
Year-to-date, the Shilling has depreciated marginally (0.4%), maintaining relative stability compared to regional peers.

Forex reserves declined 2.3% to USD 12.0bn, equivalent to 5.2 months of import cover, still comfortably above the 4.0-month statutory floor. The moderation was largely due to external debt settlements, but reserves remain sufficient to anchor currency and investor confidence.

Market Insight

Investor sentiment in the fixed income space remains constructive, supported by:

• Anchored inflation and a stable CBR,
• Strong subscription momentum in both bills and bonds, and
• Improved fiscal transparency around buyback operations and debt rollover management.

However, near-term risks include exchange rate pressures, external debt obligations, and potential fiscal imbalances as the government approaches mid-year budget execution. The steepening yield curve on the long end presents selective opportunities for investors seeking duration and inflation protection.

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