Kenya Fixed Income Market Update – 4th July 2025

Primary Treasury Bill Auction:
The Treasury bills market recorded an undersubscription for the second consecutive week, though investor participation slightly improved. The overall subscription rate rose to 90.9%, compared to 60.4% in the previous week.

• 91-day paper: Demand remained relatively low, with a subscription rate of 67.4%, albeit higher than last week’s 36.2%.
• 182-day paper: Subscription surged significantly to 111.7% from 12.0% previously, reflecting renewed investor appetite for the medium-term tenor.
• 364-day paper: Demand softened, with a subscription rate of 79.6%, down from 118.4% last week.

The government accepted Kshs 21.77 billion out of Kshs 21.83 billion bids received, representing a high acceptance rate of 99.7%.

Yields:
Rates exhibited mixed movements:

Key Economic Highlights:

1. Kenya’s Balance of Payments (BOP) Weakens:
The Kenya National Bureau of Statistics (KNBS) released the Q1’2025 Balance of Payments report, revealing a significant deterioration:

• Q1’2025 deficit: Kshs 77.0 billion, a sharp reversal from the Kshs 36.0 billion surplus recorded in Q1’2024—a deterioration of 313.8%.

2. Steady GDP Growth:
KNBS also released the Q1’2025 GDP data:

• Economic growth remained stable at 4.9%, unchanged from Q1’2024.
• Agriculture, fishing, and forestry remained the backbone of GDP, expanding by 6.0% in Q1’2025, outperforming the 5.6% growth in Q1’2024.

3. Landmark Infrastructure Financing:
Linzi FinCo 003 Trust announced full subscription of its Kshs 44.8 billion Infrastructure Asset-Backed Securities (IABS):

• Subscription rate: 100.2%.
• The 15-year securities offer a fixed annual return of 15.04%.
• Proceeds will finance the Talanta Sports Complex, backed by receivables from the Sports, Arts, and Social Development Fund (SASDF).