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Kenya Fixed Income Market Weekly Update – January 31, 2025
The Kenyan fixed income market witnessed a slowdown this week, with Treasury bills (T-bills) underperforming, marking a reversal from last week’s oversubscription. Additionally, inflation edged up slightly, while the government reopened infrastructure bonds for investors.
1️⃣ Treasury Bills Subscription & Yield Performance
Kenya’s T-bills recorded an overall undersubscription of 56.1%, compared to 136.7% last week. The sharp decline was driven by reduced investor interest in shorter-term securities:
| T-Bill | Subscription Rate | Last Week’s Rate | Yield Movement |
|---|---|---|---|
| 91-day | 61.6% 📉 | 419.8% | 9.52% (-0.3bps) |
| 182-day | 28.6% 📉 | 38.2% | 10.03% (-0.04bps, unchanged) |
| 364-day | 81.3% 📉 | 122.0% | 11.31% (+1.9bps) |
✅ The government accepted Ksh 13.1 billion out of Ksh 13.5 billion in bids, maintaining a high acceptance rate of 97.2%.
2️⃣ Government Bond Issuance: New Investment Opportunity
The Central Bank of Kenya (CBK) is raising Ksh 70 billion through the reopening of two infrastructure bonds, providing a solid investment opportunity:
📌 Bonds on Offer:
- IFB1/2022/14 (Maturity: 11.8 years) – 13.9% fixed coupon
- IFB1/2023/17 (Maturity: 15.1 years) – 14.4% fixed coupon
📅 Sale Period: 23rd January – 12th February 2025
💰 Bidding Range:
- 12.85%-13.55% (IFB1/2022/14)
- 12.95%-13.65% (IFB1/2023/17)
3️⃣ Inflation Update: January 2025
The Kenya National Bureau of Statistics (KNBS) released inflation data for January 2025, revealing a slight increase:
📊 Year-on-Year Inflation: 3.3% (up from 3.0% in December 2024)
✔️ Key Drivers of Inflation:
- Fuel price hikes (January adjustments)
- CBR cut to 11.25% (from 12.00%) in Dec 2024
This aligns with market expectations of inflation remaining within the projected range of 3.1% – 3.4%.
4️⃣ Market Outlook & Investment Takeaways
💡 What This Means for Investors:
✅ Government bonds remain attractive with high fixed coupon rates and tax advantages.
✅ T-bill yields remain stable, but investor demand is shifting towards longer-term securities.
✅ Inflation remains manageable, but fuel price movements will be a key factor to watch.
📢 For a detailed analysis of Kenya’s fixed income trends and investment strategies, stay tuned for our weekly updates!
🔗 Stay Informed: Get Weekly Market Insights
📍 Looking for expert insights and weekly investment updates? Follow NuPath Advisory for timely reports on Kenya’s fixed income, equities, and money market trends.
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