This archive report was first published on 19 November 2021.
Investing in Treasury Bills and Bonds in Kenya ¶
Investing in treasury bills and bonds is a popular way to earn money in Kenya, offering stable returns and minimal risk. Treasury bills are short-term debts issued by the government, while bonds are long-term loans with fixed interest rates.
Published on November 19, 2021, by Nyakundi Report.
Treasury Bills ¶
Treasury bills are short-term debts issued by the government to raise money. The Central Bank of Kenya (CBK) sells these bills weekly, and investors can choose from three maturity periods: 91 days, 182 days, and 364 days.
Investors pay less than the face value of the bill when purchasing it, but receive the full face value upon maturity. For example, if an investor buys a Sh. 100,000 T-bill, they pay Sh. 90,000 but receive Sh. 100,000 upon maturity.
Starting to Invest in T-Bills ¶
Anyone living in or outside Kenya, including non-Kenyan citizens, can invest in T-bills. To start investing, one needs a Central Depository and Settlement (CDS) account with the CBK. Non-Kenyan citizens living in Kenya must directly open a CDS account with the CBK, while those outside Kenya can invest as nominees of a local commercial or investment bank, or stock broker.
T-Bills Return on Investment ¶
Treasury bills are priced to offer interests above the national inflation rate. The minimum investment is Sh. 100,000, while the maximum is Sh. 20 million. Any amount above the minimum must be in multiples of Sh. 50,000. Once T-bills mature, the CBK electronically remits the face value directly to the investor.
Government Bonds ¶
Government bonds are long-term loans with fixed interest rates, issued by the government to borrow money in local currency. They have maturities ranging from 1 to 30 years. Investors loan the government their money and receive a fixed interest for the agreed duration.
Corporate Bonds ¶
Corporates in the private sector can also issue bonds under the corporate bond market segment. For example, Family Bank received approval to raise Sh. 4 billion through the corporate bond market in June this year, offering a maturity of 5.5 years at a fixed rate of 13 per cent per year.
