CBK: Kenya Eurobond yields rise as bond market faces fresh pressure

Kenya's Eurobond yields increased by an average of 22.28 basis points in the week to October 1, 2026, signaling higher borrowing costs in the international bond market, according to data released by the Central Bank of Kenya (CBK) on October 2. The CBK reported increases in yields across multiple of Kenya's Eurobond issues during the period, including the 10-year 2028 Eurobond, which saw its yield rise to 7.626 percent.

Similar increases were also observed in other African markets, with bonds issued by Côte d’Ivoire and Angola also posting higher yields during the same week. CBK data showed that Kenya's 2028 Eurobond yield remained higher than levels recorded through most of the third quarter, indicating shifts in international market pricing. Investors demand higher returns to hold debt when yields rise, which is evidenced by this increase.

The rise in yields is attributed to global financial markets reacting to changes in major currencies, interest rates, and inflation expectations. At home, government bond activity surged during the week, with bond turnover rising by 27.7 percent, while activity in the equities market declined. The Nairobi Securities Exchange All Share Index (NASI) fell by 0.66 percent, while the NSE 25 and NSE 20 indices decreased by 0.91 percent and 0.95 percent, respectively.

Despite this, equity turnover dropped by 56.43 percent during the week. The CBK also noted continued demand for government securities in the primary market, with Treasury bills attracting Ksh47.7 billion in bids, and the government's Treasury bond auction on September 30 drawing Ksh80.6 billion in bids. The US Dollar Index rose by 0.80 percent, while Germany's headline inflation increased to 3.3 percent in September, up from 2.9 percent in August.

US economic growth for the second quarter was revised upwards to 2.2 percent. Commodity markets saw a decline in Murban crude oil to about Ksh12,421 per barrel and spot gold falling to around Ksh541,897 an ounce. Kenya's foreign exchange reserves were estimated at about Ksh1.94 trillion as of October 1, representing 6.1 months of import cover.

The Kenyan shilling traded at Ksh129.71 against the US dollar on October 1, a slight increase from Ksh129.48 a week earlier. The money market remained liquid during the week, with excess reserves surpassing the required minimum at Ksh22.1 billion. The rise in Eurobond yields reflects Kenya's ongoing access to both domestic and international debt markets to finance government expenditure and manage existing obligations.