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Treasury Bonds

Treasury Bonds are medium to long term debt instruments, usually longer than one year, that are issued by the Government to raise money in local currency. Maturities of Treasury Bonds that have been issued so far range from 1-30 years and are issued monthly.

Most Common Types of Treasury Bonds Issued by Government of Kenya

The types of Treasury Bonds may be defined by the purpose, interest rate structure, maturity structure, and even by issuer. Below are the most common types:

  • Fixed Coupon Treasury Bonds – These bear predetermined or market derived fixed coupon (interest) which is paid semiannually on the face value held during the life of the bond. When bought at a discount (required yield higher than coupon), the investor benefits from discount (capital gain) which is critical for secondary market trading and regular interest payment.
  • Infrastructure Bonds – These proceeds are used to fund specific infrastructure/projects specified in the prospectus.
  • Floating Rate Bonds – These pay semiannual interests based on a benchmark rate, for example average rate of 91-days or 182-days Treasury Bill plus some margin. They are on high demand in high inflationary environment. Since 2001, they were no longer issued by the Government, but now are issued by most corporate bodies.
  • Zero Coupon Bonds – These do not have fixed interest and investor’s return is only the discount amount equivalent to the yield quoted. They are mostly short term bonds and most are taken up by commercial banks.
Who can invest in Treasury bonds in Kenya?
  • Resident or Non-Resident Individuals and/or Corporate bodies that hold an account with a local commercial bank.
  • Resident or Non-Resident Individuals and/or Corporate bodies that may not have an account with a local commercial bank but invest as a nominee of a commercial bank or investment bank in Kenya.
  • Resident or Non-Resident Individual and/or Corporate body that has CDS Account with Central Bank of Kenya
  • Minimum face value of Ksh 50, 000, additional values MUST be in multiples of Ksh. 50,000 except for Infrastructure bonds whose minimum investible amount is Ksh 100,000.
  • Must complete Treasury Bonds Application Form and submit to Central Bank (or branches) on or before 2.00pm on Tuesdays of the last week of bond (s) sale period. The closing date of the sale period is indicated in the bond prospectus.

Please note that a non-Kenyan investor who is NOT domiciled in Kenya can invest in Kenya Government Treasury bonds as a NOMINEE of either a local commercial bank, investment bank or stock broker.  Non-Kenyan investors domiciled in Kenya can however invest directly by opening CDS accounts at CBK.

For more details regarding our Investment facilities or if you are in need of additional information please feel free to contact us.

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