Kenya’s domestic debt market has opened FY2025/26 on a bullish note, with investors shifting decisively towards long-term bonds amid falling short-term returns and a more accommodative monetary stance.

This auction follows the end-of-year reopening on , where CBK tapped the market for and . That sale netted on in bids—a performance rate—confirming that institutional appetite for duration was already well in motion.

In contrast, the short end of the curve continues to lose traction. Weekly T-bill auctions leading up to the bond reopenings saw declining enthusiasm. On , CBK accepted , but only the 182-day paper was oversubscribed. Just a week earlier on , total T-bill subscriptions fell short, with only the 364-day bill attracting excess demand. Yields have remained near cycle lows: 8.14% (91-day), 8.46% (182-day), and 9.72% (364-day), following the CBK’s recent rate cut.

The shift to bonds reflects a recalibration of investor strategy: with short-term rates declining and liquidity abundant, institutions are opting to extend duration and lock in double-digit yields. This trend bodes well for the National Treasury’s KSh 635 billion net domestic borrowing target for FY2025/26.