The Central Bank of Kenya received bids worth a record Sh460.4 billion for three reopened infrastructure bonds.
This is more than three times the Sh150 billion on offer, underscoring the large pool of liquidity seeking relatively safe investments.
The auction marked three records, with the Sh150 billion offer, Sh460.4 billion in bids and Sh312.03 billion in accepted bids all reaching unprecedented levels in the Treasury bond series reviewed.
Demand amounted to 307 per cent of the amount offered, prompting the CBK to accept more than twice the advertised amount.
The three tax-free infrastructure bonds—IFB1/2019/016, IFB1/2021/018 and IFB1/2021/021—mature in October 2035, March 2039 and August 2042 respectively.
The longest-dated paper attracted Sh139.3 billion in bids, of which Sh93.9 billion was accepted.
The IFB1/2019/016 received Sh166.22 billion and secured Sh112.6 billion, while IFB1/2021/018 attracted Sh154.9 billion, with Sh105.5 billion accepted.
Of the Sh312.03 billion accepted, Sh118.1 billion will refinance maturing debt, leaving the government with Sh193.9 billion in net new borrowing.
The strong appetite for government securities points to substantial liquidity in the financial system and continued investor preference for predictable, tax-free returns amid cautious private-sector investment.
Analysts attributed the surge to excess cash held by banks, foreign investors and statutory institutions.
The appetite extended to short-term government paper.
Treasury bills worth Sh40.8 billion were sold against an advertised Sh28 billion, translating into a performance rate of 145.7 per cent.
The 91-day T-bill yield declined, while the 364-day rate edged up marginally and the 182-day rate remained unchanged.
Against this backdrop, listed non-bank financial services provider Sanlam Allianz Holdings (Kenya) Plc reported a sharp improvement in profitability.
The insurer posted a half-year net profit of Sh124.6 million, up from Sh30.9 million in the corresponding period last year.
Insurance revenue rose to Sh2.2 billion, despite higher claims and weaker investment returns during the period.
The results suggest that stronger underlying insurance operations and cost controls helped cushion the company against pressure from claims and investment income.
Sanlam Allianz Holdings Kenya group chief executive officer Patrick Tumbo said the company had continued investing in business development while working to accelerate growth and reduce operating costs.
At the NSE, market capitalisation rose 1.4 percent to Sh3.992 trillion, while the NASI and NSE 25 indices gained 1.4 per cent and 1.4 per cent respectively.
The NSE 25 Share Index also rose 0.4 per cent.
However, the market rally was accompanied by weaker activity.
Total shares traded fell 36.6 per cent, while equity turnover declined 30.7 per cent.
The divergence highlights a market where asset valuations are strengthening even as trading volumes remain subdued, while the bond market continues to absorb large pools of domestic and institutional liquidity.
The week offered a clear picture of Kenya’s financial landscape: strong demand for government paper, improving corporate resilience and rising equity valuations.
