The Government of Kenya, through the Central Bank, is re-opening two fixed-income bonds FXD1/2012/020 and FXD1/2022/015 targeting KES 40 billion for budgetary support in FY 2025/26.
Bond Details
FXD1/2012/020: 7.0 years to maturity, coupon rate 12.000%, recommended bid range 12.37% – 12.57%
FXD1/2022/015: 11.4 years to maturity, coupon rate 13.942%, recommended bid range 13.13% – 13.33%
Auction Period: 23rd October – 5th November 2025
Settlement Date: 10th November 2025
Market Context
November’s total government obligations stand at approximately KES 212.5 billion, up from KES 165.4 billion in October, reflecting heavier refinancing pressure. However, with the recent USD 872 million (KES 112.6 billion) Eurobond inflow following a partial buyback of the 2028 note the government’s liquidity position has improved significantly.
Fiscal Performance
Government revenue rose by 32.8% year-on-year in September to KES 1.03 trillion, the highest in five years. Tax revenue increased by 5.3%, while domestic borrowing surged by 77.6%, reflecting the government’s proactive debt management approach. Despite achieving 93.1% of prorated targets, the exchequer maintains a solid fiscal buffer, which may limit the acceptance of overly aggressive bids in the short term.
T-Bill Market Trends
Investor participation eased in October, with the average subscription rate declining to 97.6% from 118.9% in September. The 91-day T-Bill yield fell below 8% following a 25bps policy rate cut that reduced the Central Bank Rate to 9.25%. The market continues to show a shift towards medium- and long-term papers as investors seek higher returns.
Liquidity and Yield Curve
Interbank activity dropped by 9.46% month-on-month, with the average interbank rate easing to 9.32%, reflecting abundant liquidity in the market. Yields declined across most segments of the curve in October, though slight upward pressure emerged in the medium to long end as investors positioned for better returns.
Real Rates and Outlook
Real interest rates fell below 5.0%, compared to 9.3% a year ago, largely due to inflation and policy easing. Although this may temper investor appetite, the government’s strengthened liquidity position is expected to support stability in upcoming auctions.
Rock Advisors’ Market Outlook
The government’s stronger liquidity position and steady revenue inflows are likely to keep yields stable in the near term.
Investors are advised to remain within recommended bid bands to optimize returns and minimize pricing risk.
Medium to long-term yields could experience mild upward movement as investors reposition for value amid ongoing fiscal adjustments.
Rock Advisors’ Recommendation:
FXD1/2012/020: Bid within 12.37% – 12.57%
FXD1/2022/015: Bid within 13.13% – 13.33%
Rock Advisors_Primary Auction Note – November 2025
