Kenya’s fixed-income market witnessed mixed performance in January 2025, with T-bills remaining oversubscribed while bond uptake slowed compared to December 2024.
Here’s a breakdown of the key trends in the government securities market.
T-Bill Performance in January 2025
Treasury bills were oversubscribed, recording an overall average subscription rate of 104.7%, slightly lower than 106.3% in December 2024. However, investor demand varied across tenors:
📉 91-day T-bill: Subscription declined to 259.3% (from 260.8%)
📉 364-day T-bill: Subscription dropped to 84.9% (from 103.3%)
📈 182-day T-bill: Subscription rose to 62.6% (from 47.5%)
Also Read: Kenya Plans to Raise Ksh.50 Billion Through Infrastructure Bonds
Despite strong demand, yields declined across all tenors:
🔻 91-day T-bill: 9.6% (-69 bps)
🔻 182-day T-bill: 10.0% (-35.9 bps)
🔻 364-day T-bill: 11.3% (-50.8 bps)
The government accepted Ksh.91.1 billion out of Ksh.100.5 billion in bids, an acceptance rate of 90.6%, higher than 87.3% in December 2024.
Weekly T-Bill Performance
During the last week of January, T-bills recorded undersubscription at 56.1%, reversing from 136.7% the previous week.
📉 91-day T-bill: 61.6% subscription (down from 419.8%)
📉 182-day T-bill: 28.6% subscription (down from 38.2%)
📉 364-day T-bill: 81.3% subscription (down from 122.0%)
The government accepted Ksh.13.1 billion out of Ksh.13.5 billion, reflecting a high acceptance rate of 97.2%.
Yields showed mixed performance:
🔺 364-day T-bill: 11.31% (+1.9 bps)
182-day T-bill: 10.03% (-0.04 bps, nearly unchanged)
🔻 91-day T-bill: 9.52% (-0.3 bps)
Bond Market Performance – January 2025
Government bonds remained oversubscribed, though at a lower rate than in December. The overall subscription rate stood at 196.7%, down from 276.7% in December 2024.
The reopened FXD1/2018/015 and FXD1/2022/025 bonds with maturities of 8.3 years and 22.7 years, respectively, attracted bids worth Ksh.59.0 billion against the Ksh.30.0 billion on offer.
🔹 Acceptance rate: 82.2% (Ksh.48.5 billion accepted)
🔹 Average yields: 14.2% (FXD1/2018/015) and 15.7% (FXD1/2022/025)
Upcoming Bond Issuance – February 2025
The government is seeking to raise Ksh.70.0 billion through two reopened infrastructure bonds (IFBs):
- IFB1/2022/14 (11.8 years to maturity) – 13.9% fixed coupon
- IFB1/2023/17 (15.1 years to maturity) – 14.4% fixed coupon
📅 Offer Period: January 23 – February 12, 2025
🔎 Bidding range:
✅ IFB1/2022/14: 12.85% – 13.55%
✅ IFB1/2023/17: 12.95% – 13.65%
Inflation and Monetary Policy Update
The Kenya National Bureau of Statistics (KNBS) reported a slight increase in inflation to 3.3% in January 2025, up from 3.0% in December 2024 – mirroring analyst projections (3.1% – 3.4%), primarily driven by:
✅ Higher fuel prices
✅ Lower Central Bank Rate (CBR) from 12.00% to 11.25% in December 2024
The Monetary Policy Committee (MPC) is scheduled to meet on February 5, 2025, to review economic conditions and set the CBR. Analysts expect a rate cut of 50 – 100 bps, bringing it to a range of 10.25% – 10.75%, citing:
🔹 Global rate cuts
🔹 The need to support economic growth
🔹 Anchored inflation expectations
🔹 Shilling stability against major currencies
