Treasury bonds are a secure, medium- to long-term investment that typically offer you interest payments every six months throughout the bond’s maturity. The Central Bank Auctions Treasury bonds on a monthly basis, but offers a variety of bonds throughout the year, so prospective investors should regularly check for upcoming auctions.
Most Treasury bonds in Kenya offer fixed rate, meaning that the interest rate determined at auction is locked in for the entire life of the bond. This makes Treasury bonds a predictable, long-term source of income. The National Treasury also occasionally issues tax-exempt infrastructure bonds, a very attractive investment.
Through the Dhow CSD portal and mobile application, Individuals and Corporate bodies can invest in Treasury bills without going through an intermediary by accessing https://dhowcsd.centralbank.go.ke/ and registering for CSD accounts. Investors inter alia individuals and corporates can equally invest via their respective Kenyan commercial banks and investment banks as custodials.
Treasury bonds are units of government debt, meaning that you are investing in the Kenyan Government.
Most Treasury bonds carry semi-annual interest payments, allowing investors to receive returns every six months.
The Central Bank auctions several different types of Treasury bonds, enabling investors to find bonds that fit their needs.
Treasury bonds are auctioned every month, providing ample investment opportunities for diverse financial needs.
Treasury bonds are offered for a set amount of years, ranging, to date, from one to 30. When choosing a bond to invest in, you’ll need to consider what is available in the upcoming auction and how long of a commitment you want to make.
There are several types of bonds that are generally made available:
When you are ready to invest, you should begin monitoring the upcoming bond prospectuses, found HERE, to find the right opportunity for you. In the prospectus, you will find information about the different bonds on offer, including the bonds’ durations until maturity, or tenor, and the coupon rates.
The coupon rate refers to the interest payments you will receive each six months. They can either be determined in the prospectus, which is typical for longer tenors, or be market determined. You will also find information in the prospectus about when investors will receive interest payments and the final redemption payment, as well as how much taxation the returns are subject to.
For more popular loans, you might also find information about amortization. When the government expects that a bond will result in significant investment, it will use amortization to reduce its burden when the bonds mature. Amortization means that instead of paying investors back in one lump sum at the end of the bond’s tenor, the Treasury pays portions of the bond back throughout its life. After these portions have been paid back to investors, they receive smaller interest payments as the amount of their money held with the Treasury has been reduced.
Please follow the steps provided here https://www.centralbank.go.ke/wp-content/uploads/2023/07/CSD-USSD-Primary-Issues-User-Guide.pdf
Investors who may have maturities on specific settlement dates, have the option of performing a netting action by activating the netting flag via the DhowCSD web portal under the “my account information” tab then “CSD linking” or if using the DhowCSD mobile app, “settings” tab, then “account”. By activating the netting flag, any corporate (coupon payment or redemption) that coincides with a given bid on a settlement date will be netted off and any refund or top up will be applied.
