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NSSF increases its Eurobonds holdings to Sh34 billion
The NSSF’s emphasis on asset diversification has come at a time when higher contributions by members have raised its total assets to Sh575 billion, from Sh402.2 billion in the year ended June 2024.
The National Social Security Fund (NSSF) increased its investment in Eurobonds nearly five times to Sh34.3 billion in the year to June 2025 from Sh7.17 billion a year earlier, deepening the fund's efforts to diversify its portfolio from the traditional bonds, equities and property assets.
This 378.3 percent rise was the highest among the 12 major asset classes to which the State-controlled NSSF is exposed, ahead of offshore and private equity investments, which rose 145 percent and 120.7 percent to Sh2.6 billion and Sh7.3 billion respectively.
Investments in Real Estate Investment Trusts (Reits), which are also part of pension funds’ alternative assets mix, were up 70.7 percent to Sh1.58 billion.
The NSSF’s emphasis on asset diversification has come at a time when higher contributions by members have raised its total assets to Sh575 billion, from Sh402.2 billion in the year ended June 2024.
The fund’s remitted member contributions jumped to Sh81.9 billion in the review period from Sh59.14 billion the year before, courtesy of the enhanced statutory deductions.
Contributions to the fund were increased starting February 2023 following the implementation of the NSSF Act 2013 after a decade-long court battle.
The new rates kicked in with an increase of a member’s maximum contribution from Sh200 per month to Sh1,080 —matched by the employer— in the first year. In the second year, starting February 2024, the rate was raised to Sh2,160, before going up again to Sh4,320 starting February 2025.
Next month, the contribution cap will go up further to Sh6,480 per month, and finally to Sh8,640 per month in 2027.
The decision to deploy some of the expanded war chest into Eurobonds started in 2024, when the fund purchased its initial stock of Sh7.3 billion worth of the sovereign debt securities.
These dollar-denominated securities serve as a cushion for its portfolio valuation in case of the shilling depreciating against the greenback, while also propping up returns for savers. The NSSF had first signalled its intention to invest in Eurobonds in 2023, when interest rates were elevated globally.
If the NSSF has bought Kenya’s Eurobonds, it earns annual interest of between 6.3 percent and 9.75 percent, based on the range of fixed returns on the country’s outstanding bonds that mature between 2027 and 2048.
With the yields on the bonds falling over the last year in line with Kenya’s improving macroeconomic conditions and a drop in interest rates globally, the prices of these bonds have gone up in the secondary market.
This has had the effect of raising the portfolio valuation for bondholders such as the NSSF, meaning that the year-on-year increase the fund has reported could be a mix of higher investment and capital gains.
There is an inverse relationship between bond prices and yields in the secondary market, where an increase in one results in a fall in the other.
The NSSF’s largest investment asset, however, remains local government bonds at Sh355.4 billion, representing 61.8 percent of its total investment assets.
The bond holdings grew by 40 percent or Sh101.6 billion in the year to June 2025.
The fund did not hold any Treasury bills in the period, having disposed of the Sh8.77 million worth of the short term securities it held 12-months earlier.
Listed equities are the NSSF’s second largest investment at Sh85.13 billion, or 14.8 percent of total assets, having gone up from Sh61.2 billion a year earlier.
Investments in property remained little changed at Sh35.45 billion, compared to Sh35.39 billion in June 2024.
