A Year of Records, and Retail Boom

• Kenya bond market 2025 experienced a number of trends including record turnover, the infrastructure bond frenzy, success of the Safaricom green bond, and the rise in retail sales through Cent DhowCSD.
• These trends were a result of perfect storm of policy changes, new product launches, and digital upgrades drew in a wide range of investors, lengthened the sovereign yield curve, and set new records for trading volume at the Nairobi Securities Exchange (NSE).

Kenya’s bond market was the best performer in the country’s capital markets in 2025. A perfect storm of policy changes, new product launches, and digital upgrades drew in a wide range of investors, lengthened the sovereign yield curve, and set new records for trading volume at the Nairobi Securities Exchange (NSE).

By the end of September, the secondary market had turned over more than KES2 trillion, which was more than the whole amount for 2024 with months to spare. This change shows that people are becoming more confident in fixed income even though stocks are volatile. However, the rapid change has raised concerns about concentration risks and sustainability for the coming year.

Infrastructure bonds are driving a shift in domestic borrowing.

Long-term, tax-free infrastructure bonds (IFBs) were the main source of funding for Kenya’s domestic projects in 2025. In August and September, 15- and 19-year tranches were reopened, and bids came in at more than KES207 billion, which was 415 per cent more than the KSh50 billion target.

These “sweet spot” coupons of 14–18 per cent drew investors away from short-term Treasury bills, which made it easier for the government to roll over its debt and lowered its weighted average cost of debt slightly.

The Treasury’s success in extending maturities is in line with its goals for fiscal consolidation, which include putting money into roads, energy, and housing under Vision 2030. But the high premium rates show that there are still problems that need to be fixed: Kenya still pays a lot for duration in a high-rate setting.

These bonds give the government some breathing room, but they also show how important it is to raise more money so that private credit doesn’t get crowded out in the future. Public debt is 68 per cent of GDP (World Bank, 2025).

Green Bonds Are Getting More Popular with Consumers Thanks to Safaricom

In 2025, Safaricom’s KES20 billion green bond set a new standard for sustainable finance in the Kenyan bond market. With KES41.4 billion in bids, it was oversubscribed by 175 per cent. Of the applications, 96 per cent of individual investors took part, and many of them did so through M-PESA.

This proved that the Nairobi Sustainable Finance Framework works and that strong brands with clear “use of proceeds” can get retail investors to support climate goals without having to make big concessions.

The money goes to network solarization and data center efficiency, which helps Safaricom reach its goal of net-zero emissions. Early secondary trading is still thin, which is normal for corporate paper. However, coupon payments should soon set benchmarks.

The broader signal is strong: counties, REITs, and SPVs now have a proven way to borrow money for ESG purposes. This could lead to KES100 billion in green issuance by 2030 (Climate Bonds Initiative, 2025).

New Ideas in Retail Make access more equal despite the risks of concentration

In the Kenyan bond market in 2025, digital channels sped up the process of including retail investors. The Central Bank’s DhowCSD app made it easier to get in by lowering the price to KES5,000. This pushed retail holdings past KES800 billion, which is twice what they were in 2023. The M-Akiba platform was relaunched and now works with mobile wallets. Tax-exempt IFBs and diaspora FX notes were also available as inflation hedges.

These tools gave families more power, and retail flows were the most important part of high-coupon 2023–24 IFBs. However, this concentration puts new investors at risk of mark-to-market losses if rates drop in 2026. This makes the market more volatile, since benchmarks trade actively but off-the-run issues stay the same.

Upgrades to the secondary market make it easier to buy and sell things.

The rise in trading volume in the Kenya bond market in 2025 was due to changes in the market’s microstructure. To get market makers to come to NSE, the exchange started same-day settlement for matched deals, lowered tick sizes for better pricing, and tested hybrid order/quote-driven modules.

Lower transfer fees and a planned central counterparty (CCP) in 2026 cut bid-ask spreads by one-third, according to brokerage data.

These changes made it easier for new IFBs and old benchmarks to trade, which is important for a deeper sovereign curve and corporate pricing references. But segmentation continues: fast trading in some papers is different from slow trading in off-the-run issues, which limits overall depth if sentiment changes.

How well do the Kenya Bond Market 2025 reforms work?

The year’s projects did well on all the important measures. Participation grew a lot, and retail, pension, and SACCO inflows took over from banks. Borrowing costs went down a little because people relied less on T-bills, which means the curve is getting closer to maturity. ESG, infrastructure, and micro-savings products helped the market grow by getting rid of bottlenecks. However, corporate pipelines are still behind because of disclosure issues.

What to expect in 2026: chances and risks

Rate shocks could hurt long-term IFBs that are heavy on retail, which could cause people to stop participating. Aggressive sovereign issuance could push corporate bonds out of the market, making diversification less effective. There will be more scrutiny of ESG, and weak verification could hurt trust.

Digitization has benefits: integrating the CCP and expanding DhowCSD could cut settlement times in half and bring in money from outside the country. Regionalization makes Nairobi the fixed-income center of East Africa through EAC securities passporting.

The bond market in Kenya in 2025 was a big step from reform to change. Infrastructure bonds made funding more stable, green notes promoted sustainability, retail tools made access more equal, and NSE upgrades increased liquidity.

Putting these together in 2026—encouraging companies to issue bonds, making ESG rules stricter, and protecting retail from interest rate changes—could make Kenya a continental benchmark, giving future generations lower risk and bigger markets.

Read also: Banking Stocks NSE 2025: Why Financial Shares Did Better than the Market