Kenya Fixed Income Market Update – 12th December 2025

T-Bills Auction Performance

The weekly Treasury bills auction remained oversubscribed for the 10th consecutive week, although demand eased:

• Overall subscription rate: 135.7% (↓ from 220.2%).
• Total bids received: KES 32.6 billion
• Total accepted: KES 31.7 billion
• Acceptance rate: 97.2%

🔍 Investor preference continues to lean toward the shorter end of the curve, though demand for the 91-day paper moderated.

Bond Switch Auction: FXD1/2016/010 to FXD1/2022/015

The Central Bank of Kenya (CBK) issued a switch auction invitation allowing holders of FXD1/2016/010 to convert their holdings into FXD1/2022/015.

• Switch Period: 9 Dec 2025 – 19 Jan 2026
• Destination Bond: FXD1/2022/015
  • Coupon: 13.9%
  • Maturity: April 2037
  • Auction Type: Multi-price based on yield
• Eligibility: Minimum of KES 50,000 (non-comp) or KES 2 million (comp. bids)
• Liquidity & rediscounting: Qualifies as statutory liquidity; rediscount rate set at coupon + 3.0%.

💡 The switch provides a chance to lock into a higher coupon, extend duration, and improve portfolio liquidity management.

Liquidity & Interbank Market

• Average interbank rate: 9.20% (↓ 4.6 bps)
• Interbank volumes: KES 12.9 billion (↑ 8.9%)

The slight easing of rates reflects improved system liquidity, supported by government payments, partially offsetting tax remittances.

Kenya Eurobond Market

Yields on Kenya’s Eurobonds trended upward during the week.

• 10-year Eurobond (2018) yield:
  • ↑ by 17.6 bps to 6.30% (from 6.12% the previous week)

📉 The rise may reflect cautious investor sentiment amid ongoing global rate volatility.

Kenya Shilling & Forex Reserves

• Kshs/USD: Appreciated by 11.3 bps to KES 129.2
• Forex Reserves: USD 12.1 billion (↑ 0.3%)
  • Equivalent to 5.2 months of import cover

✅ The shilling has appreciated modestly YTD, while forex reserves remain above statutory thresholds, reinforcing macro stability.

Monetary Policy Committee (MPC) Update – December 2025

At its meeting on 9th December 2025, the MPC lowered the CBR by 25 bps to 9.00%, citing:

• Anchored inflation (4.5% in Nov, ↓ from 4.6% in Oct)
• Core inflation at 2.3%
• Sustained currency stability
• Resilient GDP growth:
  • H1 2025 average growth: 4.9%
  • 2025 forecast: 5.2%
  • 2026 forecast: 5.5%

Key insights:

• Private sector credit growth improved to 6.3% (Nov) from 5.9% (Oct)
• NPL ratio fell to 16.5% from 16.7%
• Commercial lending rates declined to 14.9% (Nov)
• CBK’s RBCPM to be fully operational by March 2026 to enhance rate transparency
• Balance of payments surplus projected at USD 1.94 bn (2025)

🔎 The easing bias reflects confidence in stable inflation, declining rates, and resilient economic fundamentals.

Corporate Debt Market Highlight: Safaricom Medium-Term Note (MTN)

• Tranche 1 Target: KES 15.0 bn
• Subscriptions Received: KES 41.4 bn
• Oversubscription: 275.7%
• Greenshoe exercised: KES 5.0 bn
• Total Raised: KES 20.0 bn
• Coupon: 10.4%
• Tenor: 5 years
• Maturity: 11 Dec 2030
• Listing: 16 Dec 2025 on NSE

📈 The strong demand underscores institutional confidence in Safaricom’s credit profile and the appetite for high-quality corporate paper.

Outlook

• Interest rates continue to ease amid policy support and moderating inflation.
• Market liquidity remains ample, encouraging strong auction participation.
• Bond investors may remain focused on duration strategies and switch opportunities.
• The corporate debt market is gaining traction, as demonstrated by Safaricom’s successful MTN issuance.