Kenya’s Treasury bills (T-Bills) were undersubscribed for the first time in two months, with the overall subscription rate dropping to 60.4%, a significant decline from the 114.1% recorded the previous week.
According to Cytonn Investments, the undersubscription points to a shift in investor sentiment amid falling yields and increased caution in the fixed-income market.
Investor appetite for the shorter 91-day paper weakened sharply, receiving bids worth only Ksh. 1.4 billion against an offer of Ksh. 4.0 billion—translating to a subscription rate of 36.2%, down from 93.6% the previous week. The 182-day paper also saw a drop in interest, attracting a subscription rate of just 12.0%, down from 26.1%.
While the 364-day paper remained the most attractive, its subscription rate still fell to 118.4%, down from 210.4% the previous week.
Despite the slowdown in subscriptions, the government accepted nearly all the bids received, taking in Ksh. 14.4 billion out of Ksh. 14.5 billion—an acceptance rate of 99.7%.
Yields Continue Downward Trend
In the bond market, the government reopened two long-term infrastructure bonds—FXD1/2018/020 and FXD1/2018/025—seeking to raise Ksh. 50.0 billion for budgetary support. The bonds carry fixed coupon rates of 13.2% and 13.4% respectively, with remaining maturities of 12.8 and 18.0 years.
The sale period opened on June 24, 2025, and closes on July 9, 2025. Cytonn recommends a bidding range of 12.25%-13.00% for FXD1/2018/020 and 12.35%-13.00% for FXD1/2018/025.
Also Read: Investors Heavily Shun 182, 364-day T-Bills Even as Shilling Holds Steady
Money Market Shows Mixed Signals
The money market offered a mixed picture with the three-month bank placements averaged 9.9%, based on offers from various banks.
The Cytonn Money Market Fund saw a slight yield drop of 2.0 basis points, remaining relatively flat at 13.5%. Meanwhile, the average yield among the Top 5 money market funds declined by 17.0 basis points to 13.1%, down from 13.3%.
Cytonn notes that the ongoing decline in government paper yields is influencing returns in the money markets, as investors reallocate capital across instruments.
Eurobond Yields Fall
Kenya’s Eurobonds also experienced yield declines during the week. The 10-year Eurobond issued in 2018 recorded the most significant drop, shedding 20.8 basis points to settle at 8.3%, down from 8.5% the previous week.
According to Cytonn, the decline in Eurobond yields reflects improved investor confidence in Kenya’s external debt position, coupled with a relatively stable macroeconomic environment.
