The Nairobi Securities Exchange's bond market posted record monthly turnover of KSh418 Bn in February 2026, as investors traded legacy high-coupon government debt at steep premiums above face value amid record ten consecutive CBK rate cuts.
- •The February figure was 40.7% above January's KSh297 Bn and 54.0% higher year-on-year.
- • The two months combined produced KSh715 Bn, more than a quarter of the KSh2.71 trillion posted across all of 2025, itself nearly double 2024's KSh1.54 trillion.
- •All ten of the highest monthly bond turnover figures in 15 years of NSE data fall within the last 24 months.
"After a strong rally in 2024 and 2025, fixed income markets are expected to normalise in 2026, with yield compression continuing at a slower pace and returns increasingly driven by carry rather than capital gains," Standard Investment Bank said in its 2026 fixed income and equities outlook.
CBK rate cuts lowered the benchmark rate from 13% to 8.75% between August 2024 and February 2026, compressing yields on new government paper and pushing prices of legacy bonds above par. The 8.5-year infrastructure bond, carrying a tax-free coupon of 18.46%, was trading at KSh128.57 per KSh100 unit in late February, a capital gain of 28.6%.
The 6.5-year bond issued in 2023 at a coupon of 17.93% was trading at KSh115.40.
Holders across the infrastructure bond portfolio recorded KSh134 Bn in trading profits in the nine months to September 2025. Banks, constrained by private sector credit growth of just 6.4% in January, channelled excess liquidity into government securities trading. Kenya's 10-year bond yield fell to 11.26% in late February, its lowest since September 2014, down 207 basis points year-on-year.
Primary market demand reinforced secondary activity. The February 11 auction drew KSh213.74 Bn in bids for a KSh50 Bn offer, a 427% performance rate and the highest non-infrastructure bond demand in CBK records. Fiscal year 2025/26 bond auctions to February 16 received KSh1.38 trillion in bids against KSh540 Bn offered, with the government raising KSh746.35 Bn. Household holdings of government debt rose to KSh438.3 Bn from KSh288 Bn three years earlier as retail participation through the CBK's DhowCSD platform deepened the secondary market buyer base.
Equity trading also rose on separate drivers with the turnover of KSh24.97 Bn being 191.3% above February 2025's KSh8.57 Bn and 80.5% above January's KSh13.83 Bn. NSE market capitalization closed at a record KSh3.41 trillion, up KSh326.99 Bn on the month. The February 10 launch of Safaricom's Ziidi Trader captured 55% of share orders by count but accounted for just 2% of trade value, constrained by the KSh500,000 mobile transaction cap. Institutional flows in large-cap banking and telecom stocks drove the bulk of turnover.
The bond-to-equity ratio narrowed from 58.8 times in February 2024, when equity turnover stood at a 15-year low of KSh4.61 Bn, to 16.7 times in February 2026. Combined January to February equity turnover of KSh38.81 Bn was 113.9% above the same period of 2025.
The records lifted broker revenues. Investment banks and stockbrokers reported a 156% jump in collective net profit to KSh1.1 Bn in the six months to June 2025, with brokerage commissions rising 49% to KSh1.46 Bn.
Kenya's domestic debt stock crossed KSh7.05 trillion in February, with KSh822 Bn in bond maturities due in 2026 and interest payments absorbing 30 to 35% of tax revenue. SIB's outlook flagged that heavy reliance on local markets risks crowding out private sector credit, the same channel the CBK rate cuts were designed to open.
