Steady Liquidity, Softer Interbank Rates as Treasury Bill Demand Rebounds

Liquidity conditions in the market kicked off the year on a steady note, with the Kenya Shilling Overnight Interbank Average (KESONIA) largely stable at 8.99% (-0.55bps w/w).

Interbank lending eased during the week, with the average traded volumes trending lower by 7.9% w/w to KES 9.4bn, from KES 10.2bn in the prior week. The reduction was mirrored in lower transaction counts (-26.3% w/w to 14). Notably, some players opted to utilize the discount window, with an average borrowing of KES 2.0bn.

The average interbank rate tapered to an average of 9.9% in 2025, down c. 310.2bps from an average of 13.0% in 2024, as market players priced in CBK rate cuts through the year, further supported by continued CBK policy reforms. In addition, average interbank volumes inched lower to an average of KES 13.8bn, down c.48.2% y/y from an average of KES 26.7bn.

This week, demand for Treasury Bills bounced back after subdued demand in the prior auction, likely influenced by the festive season. The overall subscription rate surged to 108.0% from 22.5% in the previous week, with the accepted amount slightly higher than the maturity amounts, resulting in a net borrowing of KES 14.4bn.

In absolute terms, the 184-day paper received the highest demand, with the paper garnering 43.6% of the total submitted bids. The 364-day paper followed suit, recording a performance rate of 83.0%, while the 91-day paper recorded a performance rate of 158.2%.

Overall, KES 25.9bn was accepted, with the weighted average rate of accepted bids at 7.73% (-0.05 bps w/w), 7.80% (flat for the third consecutive auction), and 9.21% (-0.14bps w/w) for the 91-day, 182-day, and 364-day papers, respectively.

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