Fixed Income Market Update – 18th April 2025

📌 T-Bill Market Overview

The T-bill market remained strong with oversubscription for the third week in a row, posting an overall subscription rate of 160.1%, though slightly lower than the 224.0% seen the previous week.

Investor sentiment, however, shifted notably:

• Demand for the 91-day paper fell sharply, receiving only Kshs 2.1 bn in bids against the Kshs 4.0 bn on offer, marking an undersubscription of 52.2%, a significant drop from last week’s oversubscription rate of 435.4%.
• The 182-day paper recorded a subscription rate of 88.0%, also lower than the prior week’s 110.7%.
• In contrast, the 364-day paper remained strong with a robust subscription rate of 275.3%, up from 252.7% previously.

The government accepted Kshs 36.4 bn out of Kshs 38.4 bn in total bids — a high acceptance rate of 94.6%.

📉 Yield Movements

Yields on all government papers continued to decline, signaling a softening rate environment:

• The 91-day paper yield dropped slightly to 8.5%,
• The 182-day paper saw a deeper decline to 8.8%,
• And the 364-day paper recorded the largest dip, falling to 10.1%.

💼 Primary Bond Market Activity

The government is currently seeking to raise Kshs 80.0 bn through the reopened FXD1/2022/015, FXD1/2022/025, and FXD1/2012/020 bonds. These carry fixed coupon rates of 13.9%, 14.2%, and 12.0%, and have remaining maturities of 12.0, 22.5, and 7.6 years, respectively.

💱 Currency & Macro Update

The Kenyan Shilling weakened slightly, depreciating by 6.2 bps against the US Dollar to close at Kshs 129.8. This brings the year-to-date depreciation to 37.5 bps, in contrast to the 17.4% appreciation recorded in 2024.

🏛️ Revenue Performance Update

The National Treasury reported that Kshs 1,702.9 bn had been collected in total revenue as of the end of March 2025. This represents:

• 66.0% of the revised full-year estimate of Kshs 2,580.9 bn
• And 88.0% of the prorated estimate for the nine-month period ending March.

⛽ Fuel Price Review – April 2025

The Energy and Petroleum Regulatory Authority (EPRA) reduced retail fuel prices for the month:

• Petrol prices decreased by Kshs 2.0,
• Diesel dropped by Kshs 2.2,
• And Kerosene fell by Kshs 2.4.

This translates to fuel now retailing at Kshs 174.6 (Petrol), Kshs 164.9 (Diesel), and Kshs 150.0 (Kerosene) — bringing welcome relief to households and businesses, particularly in transport and manufacturing sectors.