Why Are Kenyan Companies Suddenly Issuing More Notes & Corporate Bonds at the NSE?

Introduction

Over the last two years, Kenya has witnessed a wave of corporate bond issuances — from real estate firms, banks, telcos, to manufacturing and energy companies. What was once a rare event is suddenly becoming common. Large corporates such as Safaricom, EABL, Centum, Acorn, and banks are increasingly turning to the debt markets to raise billions.

Below are the major drivers behind this shift.

1️⃣ High Bank Interest Rates → Companies Looking for Cheaper Capital

Between 2023 and 2025, bank lending rates in Kenya rose sharply as:

CBK tightened monetary policy
Inflation remained high
Government borrowing pushed yields upward

Bank loans became too expensive, with some corporates facing double-digit interest costs.

Corporate bonds offer a cheaper alternative because companies can:

Negotiate favorable coupon rates
Stretch repayment periods (5–10 years)
Attract institutional investors with appetite for long-term debt

This makes MTNs far more attractive than commercial loans.

2️⃣ Government Crowding Out the Private Sector

The Kenyan government’s heavy domestic borrowing has caused:

Liquidity tightening
Higher interest rates
Banks prioritizing government securities (risk-free, high return)

Corporates are squeezed out of traditional bank funding and are forced to raise capital through public markets to avoid competing with the government.

3️⃣ CMA Reforms Have Improved the Bond Market

Between 2023–2025, the Capital Markets Authority introduced reforms to:

Speed up approval of MTN programmes
Strengthen investor protection
Create frameworks for ESG-linked instruments
Improve market transparency

These reforms have rebuilt confidence in corporate bonds after past defaults and revived interest in the market.

4️⃣ Growing Investor Appetite for Higher-Yield Fixed Income

Kenyan investors — both retail and institutional — are increasingly seeking:

Higher returns than MMFs
More stable income than equities
Safer alternatives than crypto/forex

Corporate bonds from strong issuers like Safaricom, banks, and EABL offer:

Attractive semi-annual interest payments
Higher yields than Treasury instruments
Lower risk than small-cap corporate issuers

This demand fuels more supply.

5️⃣ Corporates Are Expanding and Need Long-Term Capital

Many companies need funding for:

Infrastructure
Regional expansion
Working capital strengthening
Technology and digitization
Renewable energy investments

Instead of taking expensive bank loans or diluting shareholders through rights issues, they now choose MTN programmes, which provide:

Predictable funding
Long-term repayment periods
Flexible issuance windows

6️⃣ Diversification of Funding Sources

Corporates no longer want to depend on banks alone. An MTN programme helps a company:

Spread funding risk
Lock in long-term capital
Improve financial resilience
Tap into public and institutional investors

This makes corporate bonds a strategic financial tool.

Safaricom’s KES 40 Billion MTN Programme — Summary

Safaricom PLC recently secured approval from the Capital Markets Authority to establish a KES 40 billion Medium Term Note (MTN) Programme. This allows the company to issue notes in various tranches over several years.

Key Highlights

Approval granted on 7 November 2025
Issuances may include:
- Green notes
- Social notes
- Sustainability-linked notes
First issuance will be Tranche 1, supported by:
- An Information Memorandum
- A Pricing Supplement
Tranche 1 is subject to final commercial terms and CMA approval
Additional announcements will be made after finalizing offer details

This MTN programme positions Safaricom to secure long-term capital for network expansion, digital infrastructure, and sustainability projects.

EABL: Another Major Corporate closed Bond Issuance

East African Breweries PLC (EABL) has also signaled strong interest in the bond market, following the same trend as Safaricom. EABL historically issued a successful corporate bond in 2011 and has since shown renewed appetite for market-based financing.

Why EABL Is Interested in Corporate Notes

Rising financing costs from banks
Increased working capital needs
Heavy capex spending (production lines, distribution, sustainability initiatives)
A desire to diversify funding sources
Strong investor appetite for stable, high-credit-quality corporates

Unlike many listed companies, EABL has a strong brand, stable cashflows, and regional presence — making it an attractive fixed-income issuer for institutional and retail investors.

Expected Use of Funds (Typical for EABL)

Debt refinancing
Expansion of manufacturing capacity
Supply-chain optimization
Sustainability projects (energy efficiency, waste reduction)

EABL’s entry into the corporate bond market aligns perfectly with the current trend of large corporates shifting toward long-term capital markets funding.