Nairobi — Kenya’s bond market continues to present a compelling narrative for investors, offering robust returns through the second half of 2025 even as the exuberance of earlier periods sees yields gently recede. While the spectacular “eightfold” profit figures reported for the first half of the year may represent a high-water mark, the underlying fundamentals of strong demand and consistent issuance indicate a sustained, albeit recalibrated, period of profitability for those seeking safe havens and steady income.
The resilience of Kenyan government debt is a testament to its perceived stability in a volatile global economic landscape. Investors, both domestic and international, have consistently demonstrated a keen appetite for the certainty offered by Treasury bills and bonds. This demand is vividly illustrated in the persistent oversubscription of recent auctions. A notable July 2025 sale of 20-year and 25-year Treasury bonds, for instance, saw bids soar to KSh 76.9 billion against an advertised KSh 50 billion, showcasing a remarkable oversubscription rate exceeding 150%. Such figures underscore a deep-seated confidence in the government’s ability to service its debt.
However, the very strength of this demand is subtly shifting the yield curve. Data from the Nairobi Securities Exchange (NSE) and the Central Bank of Kenya (CBK) reveals a modest downward trajectory in yields for both short-term Treasury bills and longer-dated bonds. The average yields for 91-day, 182-day, and 364-day Treasury bills experienced a slight dip in July, a common market dynamic where increased competition for a finite supply of secure assets naturally pushes down the cost of borrowing for the issuer. Longer-term bonds, while still offering attractive coupon rates—such as a 10-year bond trading at 13.43% as of September—are also adjusting to this new equilibrium.
For investors, this nuanced environment means a slight recalibration of expectations rather than a fundamental change in strategy. The market remains highly liquid and actively traded, providing ample opportunity for capital deployment. The CBK’s consistent issuance calendar further supports this. A recent prospectus outlined a re-opened Treasury bond issue for September 2025, targeting KSh 40 billion for budgetary support. These regular issuances are crucial for both institutional players managing large portfolios and individual investors seeking to diversify their holdings.
The current landscape, therefore, is one of considered opportunity. While the days of exceptionally high-yielding bonds might be phasing out, the Kenyan bond market continues to offer compelling advantages: a steady source of income, relatively low risk compared to equity markets, and a liquid trading environment. As global economic uncertainties persist, the appeal of a robust and reliably performing local debt market like Kenya’s is likely to maintain its shine, albeit with a more discerning eye on evolving yield expectations.
