Kenya’s short-term government debt is attracting strong demand, signaling renewed investor appetite. On September 1, 2025, the 91-day Treasury bill yield fell below 8.0 percent, the first time since June 2022.
Oversubscription levels have consistently exceeded 150 percent, reflecting improved liquidity in the banking sector and robust confidence in the sovereign’s fiscal position.
Monetary Policy Transmission
Speaking at CNBC Africa, Raphael Agung, Group Director of Global Markets and Chief Economist at NCBA Group said falling T-bill rates mirror Kenya’s ongoing monetary policy easing.
A recent 25 basis point cut has transmitted into lower borrowing costs, encouraging credit to the private sector. “The yield curve is well-priced,” Agung noted, adding that solvency and liquidity indicators remain on course.
Ratings Upgrade Strengthens Sentiment
The confidence boost comes on the back of an S&P credit rating upgrade. The agency cited Kenya’s improved liquidity conditions, healthier reserves, and effective liability management by the Central Bank of Kenya.
Kenya’s sovereign balance sheet has strengthened markedly over the past 12 to 15 months, despite persistent revenue challenges. Foreign reserves now stand at about $11 billion, covering nearly five months of imports.
Outlook for Treasury Bills
Agung projects that T-bill yields could decline further before stabilizing. “We see them settling beneath 7.8 percent,” he said. This trajectory, he explained, is essential for supporting growth through monetary stimulus, given fiscal constraints. He emphasized that monetary policy’s focus on the overnight rate is driving broader yield curve adjustments.
NSE Market Health Points to Recovery
The Nairobi Securities Exchange (NSE) is also showing signs of renewed strength. All major indices, NSE All Share, NSE 20, and NSE 25, have posted double-digit gains year to date.
Market capitalization and foreign participation are up, pointing to a broad recovery in equities. Lower yields in the fixed-income market are encouraging portfolio rebalancing into equities, making stocks an attractive option for money managers.
Foreign Investor Trends
Despite recent net foreign outflows of KSh1.18 billion, Agung argues the trend does not signal weakness. Improved debt sustainability and stronger reserves have enhanced confidence among external investors.
Global monetary policy shifts, particularly expected interest rate cuts by the U.S. Federal Reserve, could further spur capital inflows into Kenyan markets as investors chase higher yields.
Positive Momentum Ahead
“Kenya’s improved fiscal outlook and stronger liquidity are fueling investor confidence, and we expect this positive momentum to carry forward. With falling borrowing costs, upgraded credit ratings, and rising equity market activity, Kenya’s economic prospects appear brighter both for domestic and foreign investors.” suggested