Kenya Fixed Income Market Update – 28 November 2025

Money Markets & T-Bills Primary Auction

T-bills remained strongly supported, marking the eighth consecutive week of oversubscription. The overall subscription rate rose slightly to 186.7%, from 180.9% recorded the previous week, underscoring sustained investor appetite for short-term government securities amid a stable rate environment.

The 91-day paper continued to attract the bulk of investor demand, receiving Kshs 17.9 bn against Kshs 4.0 bn on offer—equivalent to a 448.6% subscription rate, up from 336.6% the previous week. This continued preference reflects investor positioning around liquidity, reinvestment flexibility, and the short tenor ahead of expected rate normalization.

Demand for the 182-day paper declined sharply to 5.2%, from 42.3%, while interest in the 364-day paper increased marginally to 263.5%, compared to 257.3% last week—signaling a gradual shift toward locking yields on the medium end of the curve as inflation pressures ease.

The government accepted Kshs 44.80 bn out of Kshs 44.81 bn in total bids, representing an acceptance rate of 99.98%, driven by its elevated domestic borrowing needs and favorable pricing.

T-bill yields registered a mixed but broadly stable performance:

• 91-day: 7.78% (↓ 0.1 bps)
• 182-day: 7.80% (unchanged)
• 364-day: 9.376% (↓ 0.3 bps)

The compression in yields—particularly on the 364-day—continues to reflect anchored inflation expectations, strong short-term demand and an improving macroeconomic outlook.

Government Borrowing Status – FY’2025/26

To date, the Treasury has advertised securities totaling Kshs 884.0 bn, receiving Kshs 1,138.4 bn in accepted bids:

• T-Bills: Kshs 540.2 bn
• Bonds: Kshs 598.1 bn

Redemptions to date stand at Kshs 458.4 bn, all from T-bills, resulting in a domestic borrowing surplus of Kshs 526.2 bn. This surplus positions the government comfortably ahead of its borrowing schedule, supported by persistent oversubscription in recent auctions.

Primary Bond Market

The Treasury reopened two long-dated bonds—SDB1/2011/030 and FXD1/2021/025—seeking to raise Kshs 40.0 bn. The papers carry coupon rates of 12.0% and 13.9%, and remaining tenors of 15.2 years and 20.4 years, respectively. The sale period runs from 27 November to 3 December 2025.

The issuance is expected to attract strong institutional demand given the relative premium on long-term securities, especially with a stable inflation outlook and reduced rollover risk following recent buyback operations.

Liquidity Conditions

Money market liquidity tightened slightly during the week. The average interbank rate increased by 1.2 bps, holding close to the previous week’s 9.2%. Tax remittances exerted short-term pressure, though this was partially cushioned by government disbursements.

Interbank volumes traded increased significantly by 62.4% to Kshs 16.2 bn, up from Kshs 10.0 bn, pointing to active liquidity redistribution among banks.

Kenya Eurobonds

Eurobond yields exhibited a mixed performance, reflecting both global risk sentiment and domestic macro signals.

• 10-year 2018 Eurobond: ↑ 11.0 bps to 6.2%
• 30-year 2018 Eurobond: ↓ 4.3 bps to ~9.2%

The short–mid section of the curve edged up slightly, while the long end remained broadly stable, suggesting moderating concerns around Kenya’s debt trajectory and steady external buffers.

Kenya Shilling

The Kenya Shilling appreciated marginally by 3.9 bps to close at Kshs 129.8, from Kshs 129.9 the previous week.

Year-to-date, the shilling has depreciated by 39.7 bps, although this remains far milder than the sharp appreciation seen in 2024.

Forex reserves remained stable at USD 12.0 bn, equivalent to 5.2 months of import cover—well above the minimum 4-month statutory threshold, supporting external sector resilience.

Weekly Highlights

1. November 2025 Inflation

Kenya’s y/y inflation edged down slightly to 4.5% in November from 4.6% in October. Prices were driven primarily by:

• Food & non-alcoholic beverages: 7.7%
• Transport: 5.1%
• Housing, utilities & fuels: 1.9%

Month-on-month inflation remained muted at 0.2%, reflecting contained food inflation and stable energy prices.

2. World Bank Kenya Economic Update

The World Bank issued a cautiously optimistic outlook, upgrading Kenya’s projected GDP growth to 4.9% (2025–2027), supported by:

• Stronger H1’2025 performance (Q1: 4.9%, Q2: 5.0%)
• Recovery in construction, agriculture, and services
• Improved liquidity as lending rates ease
• Strengthening external buffers
• Stable shilling boosted by remittances, exports and tourism

However, fiscal pressures remain a key concern:

• FY’2024/25 deficit widened to 5.9% of GDP (vs. 4.3% target)
• Revenue underperformance in income & excise taxes
• High interest payments (5.8% of GDP) limiting fiscal space
• Public debt at 68.8% of GDP, with elevated rollover risk due to short-term domestic debt

The World Bank underscored the need for fiscal consolidation and structural reforms to sustain growth momentum and support private sector–led expansion.

3. Safaricom Launches Kshs 15.0 bn Green Note

Safaricom opened the first tranche of its Kshs 40.0 bn MTN Programme, issuing:

• Kshs 15.0 bn (expandable to Kshs 20.0 bn with green shoe)
• 5-year fixed-rate Green Notes at 10.40%

The issuance aims to:

• Reduce Safaricom’s borrowing costs (current average: 16.3%)
• Diversify funding away from bank loans
• Support sustainability-linked capex (energy efficiency, network upgrades, carbon reduction, data centre efficiency, fiber expansion)

Investor considerations include unsecured ranking, leverage profile, and secondary market liquidity upon NSE listing.

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