Kenya Fixed Income Weekly Update – 25th April 2025

1. T-Bills Auction Results

T-bills remained popular with investors, oversubscribed for the fourth consecutive week, with the overall subscription rate climbing to 178.5%, up from 160.1% the previous week.

Breakdown by Tenor:

• 91-day paper: Continued dominance with bids worth Kshs 16.1 bn vs. Kshs 4.0 bn offered — 401.4% subscription.
• 182-day paper: Increased to 152.2% from 88.0%.
• 364-day paper: Decreased to 115.7% from 275.3%.

Acceptance & Rollover:

Out of Kshs 42.85 bn in bids, the government accepted Kshs 42.77 bn (99.8% acceptance rate), with Kshs 39.5 bn allocated to redeem/roll over maturing bills.

Yield Movements:

• 91-day: ⬇️ 2.7 bps to 8.4%
• 182-day: ⬇️ 14.0 bps to 8.6%
• 364-day: ⬇️ 5.0 bps to 10.0%

2. Liquidity in the Money Markets

Liquidity tightened marginally:

• Interbank rate: ⬆️ 5.4 bps to average 9.9%
• Interbank volumes: ⬆️ 233.6% to Kshs 23.3 bn, up from Kshs 7.0 bn
  This was partly due to tax remittances offsetting government payments.

3. Kenya Eurobonds

Kenya’s Eurobonds posted a bullish trend, with yields declining across the board.
The 12-year Eurobond (2019) led with a 63.5 bps drop, falling to 10.9% from 11.5% the previous week, indicating improved investor sentiment and reduced risk premiums.

4. Currency and External Position

Kenyan Shilling:

• Appreciated against the USD by 34.2 bps, to Kshs 129.3 from Kshs 129.8
• YTD: Slight depreciation of 3.2 bps, after a 17.4% appreciation in 2024

Forex Reserves:

• Rose marginally by 0.03% to USD 9.8 bn
• Import cover: Steady at 4.4 months, above the statutory 4.0-month minimum

5. Regulatory Watch – Risk-Based Credit Pricing Model

The Central Bank of Kenya launched a review of the Risk-Based Credit Pricing Model (RBCPM), initially introduced in 2019. The review aims to:

• Promote transparent and fair credit pricing
• Address concerns over high lending rates
• Expand access to credit, particularly for SMEs

This regulatory development may influence lending trends, interest rate movements, and investor confidence in the coming months.

🔍 Takeaway

The fixed income market remains vibrant, supported by strong investor demand and declining yields. The rebound in the 91-day T-bill reflects a continued flight to safety, even as inflation remains moderate and liquidity tightens. The CBK’s proactive stance in reviewing credit pricing frameworks further supports a more transparent and efficient debt market in the medium term.