Kenya’s pension funds sharply increased allocations to corporate bonds in 2025, driven by attractive double-digit yields and strong investor demand for fixed-income securities. Corporate bond investments rose by 77.6%, supported by successful issuances from companies including Safaricom and EABL, while government securities continued to dominate pension fund portfolios.
Key Overview
- Corporate bond investments by pension funds rose 77.6% in 2025.
- Pension assets invested in corporate bonds reached KSh17.4 billion.
- Returns from commercial paper and corporate bonds increased by 53%.
- Government securities remained the largest pension asset allocation.
- EABL and Safaricom issued oversubscribed corporate bonds.
- Double-digit yields attracted institutional investors.
- Pension funds diversified into higher-yield fixed-income assets.
- Corporate bond demand strengthened Kenya’s capital markets.
Corporate Bond Investments Jump 78% as Pension Funds Seek Higher Fixed-Income Returns
Kenya’s pension industry significantly increased its exposure to corporate bonds in 2025 as attractive yields encouraged institutional investors to diversify beyond government securities. New data from the Retirement Benefits Authority (RBA) shows pension fund investments in commercial paper and corporate bonds rose by 77.6%, marking the fastest expansion in this asset class since the Covid-19 pandemic.
The sharp increase reflects growing demand for higher-yield fixed-income investments following several successful bond issuances on the Nairobi Securities Exchange (NSE), where issuers attracted strong institutional participation through competitive coupon rates and oversubscribed offerings.
Pension Funds Increase Corporate Bond Exposure
Assets invested in commercial paper and corporate bonds increased from KSh9.9 billion in 2024 to KSh17.4 billion in 2025, representing an increase of approximately KSh7.5 billion within a single year.
The latest growth far exceeded the gradual expansion recorded over previous years. Pension investments in the asset class stood at KSh5.8 billion in 2021 before increasing to KSh6.9 billion in 2022, representing growth of 18.9%. Growth slowed considerably in 2023, when investments reached KSh7.1 billion, before accelerating by 38% in 2024 to nearly KSh9.9 billion.
The 2025 increase therefore represents the strongest annual expansion recorded over the past five years.
Higher Returns Drive Institutional Demand
The growing allocation to corporate bonds was supported by significantly stronger investment returns.
According to the Retirement Benefits Authority, returns generated from commercial paper and corporate bond investments increased by 53% during 2025 compared with the previous year, surpassing KSh2 billion.
The combination of attractive coupon rates and improving market performance encouraged pension fund managers to increase exposure to private-sector debt while maintaining diversified fixed-income portfolios.
Higher yields became particularly attractive as companies increasingly turned to Kenya’s capital markets to raise long-term financing through bond issuances.
Government Securities Continue to Dominate Portfolios
Despite the rapid growth in corporate debt investments, Kenyan government securities remained the largest component of pension fund portfolios.
The RBA reported that pension assets reached approximately KSh2.7 trillion in 2025, with government securities accounting for KSh1.39 trillion, representing 50.98% of total retirement assets.
Guaranteed funds ranked as the second-largest allocation at 20.61%, followed by quoted equities at 10.20%, while immovable property accounted for 9.09% of pension assets.
Although corporate bonds still represent a relatively small portion of total pension investments, their rapid growth highlights increasing confidence in Kenya’s private debt market.
Context is everything. Stay ahead of shifting trends with today’s market updates, and uncover emerging opportunities using the Serrari Group Market Index and Marketplace. Then, take control of your own financial future by exploring our Money & Life Reset Transformation Blueprint ™ to build stronger habits, create better systems, and design a path toward lasting wealth.
Oversubscribed Bond Issues Strengthened Market Confidence
Several successful corporate bond issuances during 2025 helped reinforce investor appetite for fixed-income securities.
East African Breweries Plc (EABL) launched the first tranche of its KSh20 billion bond programme, issuing KSh11 billion of notes carrying an 11.8% coupon. Strong investor demand saw subscriptions reach approximately KSh16.8 billion, making the offering substantially oversubscribed.
Safaricom also recorded exceptional demand after launching its tax-free green bond programme targeting KSh15 billion. Investors submitted bids worth approximately KSh41.4 billion, nearly three times the target amount, while the notes offered an attractive return of 10.4%.
The success of these offerings demonstrated growing institutional confidence in Kenya’s corporate debt market and expanded investment opportunities for pension funds.
Corporate Bonds Support Portfolio Diversification
The increased allocation to corporate bonds reflects broader efforts by pension fund managers to diversify investment portfolios while generating stronger long-term returns.
Unlike government securities, corporate bonds can offer higher coupon payments to compensate investors for additional credit risk. For large institutional investors such as pension schemes, carefully selected investment-grade corporate debt provides an opportunity to enhance portfolio income without significantly increasing overall portfolio volatility.
Successful issuances from well-established companies have also improved liquidity and investor confidence within Kenya’s domestic bond market.
Kenya’s Fixed-Income Market Continues to Mature
The strong growth in corporate bond investments suggests Kenya’s capital markets are becoming increasingly diversified beyond government borrowing.
As more companies access long-term financing through the bond market, institutional investors are gaining access to a broader range of fixed-income investment opportunities across multiple sectors of the economy.
Continued participation from pension funds is expected to strengthen market liquidity, improve corporate financing options and support the long-term development of Kenya’s domestic capital markets while helping retirement schemes generate sustainable returns for members.
FAQs
Why did pension funds increase corporate bond investments in 2025?
Pension funds increased investments in corporate bonds because attractive double-digit yields, stronger returns and successful bond issuances offered better income opportunities while improving portfolio diversification.
How much did corporate bond investments grow?
According to the Retirement Benefits Authority, pension fund investments in commercial paper and corporate bonds increased by 77.6%, rising from KSh9.9 billion in 2024 to KSh17.4 billion in 2025.
Which corporate bond issues attracted strong investor demand?
Both Safaricom and EABL recorded oversubscribed bond offerings in 2025. Safaricom attracted KSh41.4 billion in bids against a KSh15 billion target, while EABL received KSh16.8 billion in subscriptions for its KSh11 billion issue.
Do government securities still dominate pension investments?
Yes. Government securities remain the largest pension asset class, accounting for 50.98% of total retirement assets, although corporate bonds are becoming an increasingly important component of diversified investment portfolios.
Your financial future isn’t something you wait for—it’s something you build.
The real question is: when do you begin?
Move beyond simply staying informed.
Navigate the markets with clarity—track trends through the Serrari Group Market Index, uncover opportunities in the Serrari Marketplace, and build practical knowledge with our Curated Wealth Builder Platform.
Stay connected to what truly matters.
Get daily insights on macro trends and financial movements across Kenya, Africa, and global markets—delivered through the Serrari Newsletter.
Growth opens doors.
Advance your career through professional programs including ACCA, HESI A2, ATI TEAS 7 , HESI EXIT , NCLEX – RN and NCLEX – PN, Financial Literacy!🌟—designed to move you forward with confidence.
See where money is flowing—clearly and in real time.
Track Money Market Funds, Treasury Bills, Treasury Bonds, Green Bonds, and Fixed Deposits, alongside global and African indexes, key economic indicators, and the evolving Crypto and stablecoin landscape—all within Serrari’s Market Index.
