Kenya’s corporate bond market recorded a notable rise in turnover in 2025, reaching approximately Sh840 million compared to a near-zero Sh40,000 the previous year. However, despite this improvement, market activity remained significantly below historical highs such as the Sh12.47 billion recorded in 2010. The data highlights persistent structural challenges in the secondary market even as new issuances from major corporates attracted strong primary interest.
Safaricom and East African Breweries Limited (EABL) were the most prominent issuers during the year. Safaricom raised Sh20 billion as part of its approved Sh40 billion green bond program through the first tranche, while EABL mobilized about Sh16.8 billion. Both issuances took place in the final quarter of the year and were significantly oversubscribed, driven largely by strong participation from retail investors and individuals seeking exposure to high-quality corporate debt.
Despite this strong demand at the primary issuance stage, secondary market trading remained limited. Cumulative activity for the year stood at about Sh834 million according to data from the Capital Markets Authority (CMA), indicating that the infusion of new corporate bonds did little to catalyze liquidity. The contrast with the Treasury bond market was particularly pronounced, with government securities registering turnover of approximately Sh2.7 trillion in 2025, underscoring the preference among investors for highly liquid and government-backed instruments.
The muted secondary activity aligns with long-standing trends within Kenya’s corporate bond market. Many holders of corporate paper especially institutional investors tend to adopt a buy-and-hold strategy, drawn by predictable coupon payments and lower trading costs. This behavior reduces the availability of bonds for trading on the secondary market, limits price discovery, and contributes to thin trading volumes.
In addition, the yield pricing of corporate bonds often closely mirrors that of Treasury instruments, reducing incentives for active trading unless significant rate shifts occur. With the interest rate environment relatively stable toward the end of 2025, many investors opted to hold their positions rather than adjust portfolios mid-cycle.
The limited liquidity in the corporate bond segment has broader implications for capital market development. While primary market oversubscriptions indicate strong appetite for quality issuances, the absence of a vibrant secondary market can deter new participants, particularly retail investors who value flexibility. Deepening secondary market liquidity remains essential for building a more dynamic and diversified financial ecosystem.
For individual investors, the dynamics of the corporate bond market reinforce the importance of balancing long-term investments with liquid, low-risk instruments. While corporate bonds offer stable interest income and lower volatility than equities, liquidity constraints can restrict access to funds when needs arise. Maintaining a portion of savings in flexible vehicles helps mitigate such constraints.
Money market funds play a central role in this balance by offering daily liquidity, capital preservation, and steady returns. They serve as a practical tool for managing short-term financial needs while allowing investors to participate in broader market opportunities at their own pace.
As Kenya’s financial markets continue to evolve, the contrast between vibrant Treasury bond activity and muted corporate bond liquidity underscores the need for continued reforms, investor education, and enhanced market infrastructure to unlock the full potential of corporate debt instruments.
As investment markets adjust and liquidity remains a key consideration, maintaining a flexible and stable savings strategy is essential. Consider growing your savings with the Cytonn Money Market Fund (CMMF) a transparent, liquid investment option designed to help you earn steady returns while keeping your funds accessible.
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