Trading in Kenyan government bonds at the Nairobi Securities Exchange accelerated sharply in 2025, lifting total bond turnover by nearly 74% year on year to KSh 2.69 trillion, as commercial banks and insurers stepped up balance-sheet trading following policy rate adjustments.
- •Data from the Central Bank of Kenya show financial corporations holding close to 80% of domestic government securities, giving them decisive influence over market liquidity.
- •The increase extends the rebound that began in 2024, when bond turnover at the NSE more than doubled after two years of contraction.
- •2024 and 2025 mark a clear break from the subdued trading environment of 2022 and 2023, when tighter financial conditions weighed on secondary-market activity.
Treasury bonds accounted for almost all trading at the exchange in 2025. Corporate bond turnover remained negligible, reinforcing the role of government securities as the backbone of Kenya’s fixed-income market. The expansion reflects intensified secondary-market repositioning rather than a revival in private-sector issuance.
Ownership data explain the surge with financial corporations holding about 79% of domestic government securities through the final quarter of 2025. Commercial banks were the largest holders at roughly 35%, followed by pension funds at about 15% and insurance companies at around 13%. These institutions trade actively at the NSE to manage liquidity, regulatory ratios, and interest-rate risk, unlike households and public entities that tend to hold to maturity.
Banks were the main drivers of turnover as government bonds form the core of liquidity buffers and serve as collateral in interbank and central bank operations. As rate expectations shifted during the year, banks adjusted duration and yield exposure, generating heavy two-way trading at the exchange even as their share of outstanding debt stayed broadly stable.
Insurance companies also increased activity with their holdings edging higher during the period, reflecting demand for long-dated assets with predictable cash flows. Rate movements encouraged portfolio rebalancing and capital-gains positioning, supporting trading volumes, particularly at the long end of the curve. Pension funds contributed through periodic rebalancing and tenor switches given the size of their portfolios.
Foreign investors remained small holders, accounting for about 4.6% to 4.7% of domestic government securities, but their trading carries weight for liquidity and price discovery at the NSE.
Households or individual investors held about 6.5% and remained largely passive, while non-financial corporates reduced exposure to below 2%, mirroring the collapse in corporate bond trading.
