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, with a special focus on A Review of the Affordable Housing
Program. Below are the highlights;
a) Fixed Income
During the week, T-bills were oversubscribed for the seventh consecutive week with the overall
subscription rate coming in at 114.1%, albeit lower than the subscription rate of 237.4% recorded the
previous week. Investors’ preference for the shorter 91-day paper waned, with the paper receiving bids
worth Kshs 3.7 bn against the offered Kshs 4.0 bn, translating to a subscription rate of 93.6%, significantly
lower than the oversubscription rate of 364.9% recorded the previous week. The subscription rates for
the 182-day increased slightly to 26.1% from the 25.7% recorded the previous week, while the
subscription for the 364-day paper decreased to 210.4% from the 397.9% recorded the previous week.
The government accepted a total of Kshs 24.0 bn worth of bids out of Kshs 27.4 bn bids received,
translating to an acceptance rate of 87.7%. The yields on the government papers were on a downward
trajectory with the yields on the 182-day paper decreasing the most by 1.9 bps to 8.48% from the 8.49%
recorded the previous week, while the yields on the 364-day and 91-day papers decreased by 1.1 bps and
1.0 bps to 9.74% and 8.17%, from the 9.75% and 8.18% respectively recorded the previous week;
In the primary bond market, the Central Bank of Kenya released the auction results for the re-opened
treasury bonds FXD1/2020/015 and SDB1/2011/030 with tenors to maturity of 9.7 years and 15.7 years
respectively, and a fixed coupon rate of 12.8% and 12.0% respectively. The bonds were oversubscribed,
with the overall subscription rate coming in at 202.7%, receiving bids worth Kshs 101.4 bn against the
offered Kshs 50.0 bn. The government accepted bids worth Kshs 71.6 bn, translating to an acceptance
rate of 70.7%. The weighted average yield for the accepted bids for the FXD1/2020/015 and
SDB1/2011/030 came in at 13.5% and 14.0% respectively, falling within our expected bidding range of
13.25%-14.25% for the SDB1/2011/030. Notably, the 13.5% and 14.0% on the FXD1/2022/015 and
SDB1/2011/030 respectively was higher than the 12.5% and 13.8% respectively the last time they were
reopened in September 2020 and September 2014 respectively. With the Inflation rate at 3.8% as of May
2025, the real returns of the FXD1/2020/015 and SDB1/2011/030 are 9.7% and 10.2%. Given the 10.0%
withholding tax on the bonds, the tax equivalent yields for shorter term bonds with 15.0% withholding
tax are 14.3% and 14.8% for the FXD1/2020/015 and SDB1/2011/030 respectively;
During the week, the National Treasury gazetted the revenue and net expenditures for the eleventh
month of FY’2024/2025, ending 30 th May 2025, highlighting that the total revenue collected as at the end
of May 2025 amounted to Kshs 2,157.8 bn, equivalent to 83.6% of the revised estimates II of Kshs 2,580.9
bn for FY’2024/2025 and is 91.2% of the prorated estimates of Kshs 2,365.8 bn;
b) Equities
During the week, the equities market was on a downward trajectory, with NASI losing the most by 1.3%,
while NSE 10, NSE 25 and NSE 20 lost by 0.4%, 0.3% and 0.2% respectively, taking the YTD performance
to gains of 16.2%, 10.6%, 9.0% and 8.8% for NASI, NSE 20, NSE 10 and NSE 25. The equities market
performance was driven by losses recorded by large cap stocks such as Safaricom, KCB and Absa of 2.8%,
2.1% and 1.3% respectively. The performance was however supported by gains recorded by large-cap
stocks such as Standard Chartered, EABL and Diamond Trust Bank of 2.6%, 2.2% and 2.1%, respectively;
Additionally, in the regional equities market, the East African Exchanges 20 (EAE 20) share index lost by
30.0 bps, attributable to losses recorded by large cap stocks such as Safaricom PLC, MTN Rwandacell and
KCB Group of 7.6%, 4.5% and 1.8% respectively. The performance was however supported by gains
recorded by large cap stocks such as ABSA Bank, NMB Bank and Cooperative Bank of Kenya of 1.4%, 1.4%
and 1.2% respectively;
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c) Real Estate
During the week, the Central Bank of Kenya released its monthly CEO’s survey report, where 61% of
respondents said that they were impacted by the recent US tariffs and other policy changes. Stakeholders
in the hospitality sector have expressed the negative impacts that President Trump’s policies and tariffs
have had on the sector, with hotels reporting lower conference bookings from donor funded programs
and Non-Governmental Organizations;
During the week the International Finance Corporation ( IFC) , the private-sector arm of the World Bank,
disbursed Kshs 2.6 bn repayable in 7.0 years to Centum Real Estate, a Kenyan real estate firm to build
1940.0 green, energy-efficient units within Nairobi’s Two Rivers “Mizizi” project at the two rivers
residential with 600.0 units already sold in phase one;
During the week Kenya’s road infrastructure agenda suffered a blow after the National Treasury slashed
Kshs 11.7 bn from the road construction budget in the current fiscal year’s third supplementary
estimates. The revised allocation, presented by Treasury, reduces funding for capital road development
to Kshs 124.6 bn in FY’26/25, from Kshs 136.4 bn in FY’24/25, reflecting an 8.6% budget cut driven by
below-target revenue performance as the government tries to navigate the current tight budgetary
space;
On the Unquoted Securities Platform, Acorn D-REIT and I-REIT traded at Kshs 26.7 and Kshs 22.9 per unit,
respectively, as per the last updated data on 23 rd May 2025. The performance represented a 33.4% and
14.5% gain for the D-REIT and I-REIT, respectively, from the Kshs 20.0 inception price. Additionally, ILAM
Fahari I-REIT traded at Kshs 11.0 per share as of 23 rd May 2025, representing a 45.0% loss from the Kshs
20.0 inception price. The volume traded to date came in at 1.2 mn shares for the I-REIT, with a turnover
of Kshs 1.5 mn since inception in November 2015;
d) Focus of the Week
This week, we focus on the Affordable Housing Program in the country. It has been three years since the
Kenya Kwanza government assumed office, and one of its key pillars under the Bottom-Up Economic
Transformation Agenda (BETA) is providing affordable housing to Kenyans. This housing program builds
on initiatives from the previous administration under the Jubilee government's Big Four Agenda,
launched in 2017 with the ambitious goal of delivering 1,000,000 housing units by 2022;
Click the link below to read the Cytonn Weekly report: A Review of the Affordable Housing Program, &
Cytonn Weekly #25
