Kenya’s Eurobond yields slipped by an average of 28.19 basis points after S&P Global Ratings upgraded the country’s long-term credit score from ‘B-’ to ‘B’, easing investor concerns that had mounted since last year’s repayment troubles.

The sharpest fall came on the $1 billion Eurobond issued in 2018, where yields retreated to 6.86 per cent from 7.42 per cent as of August 22, a decline of 0.56 percentage points.

S&P attributed its decision to “reduced near-term external liquidity risks,” a move that investors quickly translated into renewed appetite for Kenyan paper.

The Treasury chief said that strong inflows have supported the country’s reserves and eased external pressures.

“Robust export earnings and diaspora remittances have bolstered Kenya's foreign exchange reserves, helping ease pressures related to high external imbalances,” Mbadi said.

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Bond dealings in the local secondary market mirrored this momentum, with turnover climbing to Sh66 billion from Sh59.3 billion the week before.

The Central Bank of Kenya also reopened borrowing channels on behalf of the Treasury, seeking Sh60 billion for budget financing barely a week after netting Sh180 billion from an infrastructure bond tap sale.

Analysts remain split over the surge in demand for state securities.

Some highlight the safety and predictability of government-backed returns, while others say private markets and collective schemes have turned too volatile to rival bonds.

The Treasury bill auction on August 28 drew Sh32 billion in bids, well above the Sh24 billion target, achieving a subscription of 133.5 per cent. Interest on the 91-day, 182-day and 364-day papers held steady.

Equities also rallied at the Nairobi Securities Exchange, where all major indices rose during the review week.

The NSE 20 index led with a gain of 3.89 per cent, followed by NASI at 1.88 per cent and NSE 25 at 1.53 per cent.

Market capitalisation expanded by 1.88 per cent and traded shares rose by 11.5 per cent, although equity turnover fell by 25.26 per cent.

The dual effect of an upgraded credit rating and heightened domestic market activity has strengthened optimism around Kenya’s financial outlook, though questions linger on whether investors will maintain this momentum in the months ahead.