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NSE bond trades hit record Sh2.7trn on investor surge
The bonds turnover was nearly double the Sh1.5 trillion worth of debt securities that were traded at the bourse in 2024, which also represented an all-time high and the first instance of the annual value crossing the trillion-shilling mark
The value of bonds traded in the secondary market at the Nairobi Securities Exchange (NSE) hit a historic high of Sh2.7 trillion in 2025, promising stockbrokers and the exchange operator higher commission income.
The bonds turnover was nearly double the Sh1.5 trillion worth of debt securities that were traded at the bourse in 2024, which also represented an all-time high and the first instance of the annual value crossing the trillion-shilling mark.
At the same time, equities turnover rose by 37.3 percent or Sh30 billion to Sh145 billion in 2025, further boosting the expected commissions by market players as local investor activity picked up in line with the market’s bullish run in the period.
The NSE attributed the rising turnover numbers to increased participation and demand from investors, with falling interest rates making older, high-paying bonds such as the infrastructure papers issued in 2023 and 2024 more attractive.
“We saw investors pivoting to the secondary market due to the central bank’s easing cycle, hunting for favourable yields and capital gains,” said Melodie Ndanu, a research analyst at Standard Investment Bank.
“The muted growth in banks’ lending to the private sector meant that they were also trading in government securities as they rebalanced their balance sheets.”
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.
When rates on new issuances in the market are going down in line with the Central Bank of Kenya (CBK) base rate cut from 13 percent to nine percent, investors are reluctant to sell existing holdings, which pay higher interest, since they would earn less returns from new purchases in the market. They therefore demand a premium on price if they are to sell their bonds.
The IFBs sold in 2023 and 2024 are now trading at premium prices of between Sh109 and Sh123 per bond unit of Sh100, effectively handing their holders capital gains of eight to 23 percent on the face value of their bonds.
The highest premium is on the 8.5-year infrastructure bond (IFB), which is trading at Sh123, followed by a 6.5-year IFB sold in 2023 at a coupon of 17.93 percent, which is trading at Sh115.40.
With the price premium staying elevated, bondholders who opted to offload their bonds via the NSE recorded a profit of Sh134 billion in the nine months to September 2025.
This profit is the difference between the face value of the securities and the price at which they were sold.
The vibrancy of the secondary bonds market is also a result of the increased purchases of government securities by retail investors in the primary market, backed by the introduction of the CBK’s Dhow CSD digital bonds trading platform in 2023, which has made it easier to buy government securities.
Households now hold Sh437.7 billion or 6.4 percent of the government's domestic debt, which stood at Sh6.84 trillion as of January 2. At the end of June 2025, they held Sh409.3 billion of the State’s domestic debt, CBK numbers show.
Foreign investors hold Sh321.4 billion of the debt, with non-financial companies and nonprofit organisations holding Sh123.1 billion and Sh54.7 billion respectively.
Previously, these retail bond buyers were bundled together under one umbrella known as ‘other investors’, alongside self-help groups, private companies, individuals, savings and credit co-operative societies (saccos), and religious and educational institutions. This group of investors collectively held Sh288 billion worth of government securities three years ago, illustrating the scale of growth in new bond purchases by non-institutional investors.
Their increased participation in the market has thus helped to revive the prospects of stockbrokers through increased trade fees, which form the bulk of their revenue.
Stockbrokers normally charge a commission of 0.03 percent per bond trade and between 1.5 and 1.8 percent for equities, with the NSE and the Capital Markets Authority (CMA) also collecting fees from these transactions.
The investment banks and stockbrokers reported a 156 percent jump to Sh1.1 billion in their collective net profit for the six months to June 2025, with brokerage commissions jumping by 49 percent to Sh1.46 billion, from Sh981 million in the first half of 2024.
Dry Associates led the sector with brokerage commissions of Sh236.7 million, followed by Standard Investment Bank (SIB) at Sh154.9 million, and Faida Investment Bank at Sh151.1 million. In terms of net profits, NCBA Investment Bank led with Sh278.2 million, thanks to earnings from fund management.
The NSE’s equity turnover in the first half of 2025 stood at Sh56 billion, implying that the value of shares traded in the second half of the year rose to Sh89 billion —pointing to even higher commission earnings between June and December.
For the bond market, the January to June turnover was Sh1.31 trillion, meaning that the second half of 2025 also saw an uptick in activity.
The market intermediaries were coming from a lean decade in which their profits tumbled as the market went into a prolonged bear run, which depressed traded turnover, from which they draw the bulk of their earnings in the form of commissions.
In addition to trade commissions, some leading investment banks have also been diversifying their revenue by offering fund and wealth management services, as well as undertaking their own investments in the market.
NCBA Investment Bank, for instance, reported fund management fees of Sh446.6 million in the first half of 2025, an increase from Sh302.7 million a year earlier, which eclipsed its earnings of Sh67.8 million from commissions and Sh54.9 million from advisory services.
Equity Investment Bank said it earned Sh172 million in profit from investments in the review period, when its brokerage commissions stood at Sh32.8 million.
