In our Cytonn Report this week, we analysed the performance of Kenya’s Equities, Fixed Income, and the Real Estate markets for the week ended 21st February 2024, with a 2025 review of the Kenyan currency and Interest rates. Below are the highlights; a) Fixed Income: During the week, T-bills were oversubscribed for the third consecutive week, with the overall subscription rate coming in at 137.3%, albeit lower than the subscription rate of 184.4% recorded the previous week. Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 4.5 bn against the offered Kshs 4.0 bn, translating to an oversubscription rate of 113.1%, a reversal from the undersubscription rate of 63.2% recorded the previous week. The subscription rates for the 182-day and 364-day papers decreased to 123.6% and 160.6% respectively from the to 236.2% and 181.1% recorded the previous week. The government accepted a total of Kshs 32.90 bn worth of bids out of Kshs 32.94 bn bids received, translating to an acceptance rate of 99.9%. The yields on the government papers were on a downward trajectory with the yields on the 182-day paper decreasing the most by 9.8 bps to 9.3% from 9.4% recorded the previous week, while the yields on the 91-day and 364-day papers decreased by 2.2 bps and 6.8 bps respectively to 8.9% and 10.5%, from 9.0% and 10.6% respectively recorded the previous week; Also, during the week, the Central Bank of Kenya released the auction results for the buyback of the treasury bonds FXD1/2022/003, FXD1/2020/005 and IFB1/2016/009 with tenors to maturity of 0.4 years, 0.3 years and 0.4 years respectively, and fixed coupon rates of 11.8%, 11.7% and 12.5% respectively. The offer was oversubscribed, with the overall subscription rate coming in at 112.2%, receiving bids worth Kshs 56.1 bn against the offered Kshs 50.0 bn. The government accepted bids worth Kshs 50.1 bn, translating to an acceptance rate of 89.3%, and equivalent to 27.1% of the total outstanding amount of Kshs 185.1 bn for the three bonds. The weighted average yield for the accepted bids for the FXD1/2022/003, FXD1/2020/005 and IFB1/2016/009 came in at 9.1%, 8.9% and 9.1% respectively. The yields are largely in line with the T-bill rates making the refinancing cost to the same. In the primary bond market, the government is looking to raise Kshs 25.0 bn through the reopened bond; FXD1/2018/25 with a tenor to maturity of 18.3 years and a fixed coupon rate of 13.4%. The period of sale opened on Friday, 21st February 2025, and will close on 5th March 2025. Our bidding range for the reopened bond is 13.85%-14.55%. The bond is currently trading at 13.34% in the secondary market; Click the link below to read the Cytonn Weekly report: https://cytonnreport.com/research/kenya-currency-and-interest-rates-review-2025-and-cytonn-weekly-082025