How to invest in government bonds in Kenya

A Treasury bill (T-bond) is a medium to long term security issued by the government. They typically pay interest every 6 months until the bond matures. Kenya treasury bills are issued monthly.

To invest, you need a CDS account with the Central Bank of Kenya (CBK), the issuer of government bonds in Kenya, and a bank account. A CDS account is an account that records the ownership of your securities (bonds / bills in this case) and the history of your transactions each time you buy or sell them.

Types of government bonds

1. Fixed coupon bonds

Most government bonds are fixed coupon. This means that the interest rate will not change during the life of the bond, so the semi-annual interest payments on these bonds will remain the same.

The coupon rate is the interest rate paid by bond issuers on the face value of the bond. It is the periodic interest rate paid by bond issuers to their buyers. The coupon rate is calculated on the face value of the bond. The face value of a bond is the amount that the issuer provides to the bond holder when the bond matures.


If you invest in a 10 year bond with a face value of 100,000 Kshs and a 10% coupon rate, you will earn 5,000 Kshs every 6 months. Interest will be charged with 15% withholding tax, so you will receive KShs 4,250 every 6 months.

2. Infrastructure bonds

These are used by the government for infrastructure projects. These bonds in Kenya are generating a lot of interest in the market because their yields are tax exempt.


If you invest in a 10 year infrastructure bond with a face value of 100,000 Kshs and a 10% coupon rate, you will earn 5,000 Kshs every 6 months. Unlike other bonds, your interest will not be subject to withholding tax and therefore you will receive your 5,000 KShs semi-annually.

3. Zero coupon bonds

These are similar to treasury bills in that they are sold at a discount and have no interest payment. They are generally issued for a short period of time.

How to open a CDS account

You can open a CDS account with CBK at any of its branches in Nairobi, Mombasa, Kisumu, Eldoret or at the exchange centers of Meru, Nakuru, Nyeri and Kisii. Find the details of the application process here

If you don’t want to open a CDS account with CBK, you can still invest in treasury bills through your bank. Kenyans living abroad can invest in bonds as long as they have an active Kenyan bank account. They can open a CDS account and submit all required forms to the Central Bank by email.

Invest in Treasury bonds

Currently, Kenya Treasury Bills are offered for a number of years ranging from two to 30 years. You can invest in bonds when they are issued by the government or in the secondary market when they are listed on the Nairobi Securities Exchange (NSE).

Treasury bills are auctioned monthly. The CBK publishes the prospectus which gives information on the size of the offer, the coupon rate, the sale period, the method of issue, how to bid, the date of the auction, etc. You can find the bonds offered and the auction results here Treasury bonds.

The minimum amount you can invest in is Ksh. 50,000 for the fixed coupon bond and Ksh. 100,000 for the infrastructure bond. Trading on the secondary market at the NSE is in multiples of Ksh. 50,000.

Submit your offer

There are 2 ways to invest; competitive and non-competitive offers.

In tenders, you must indicate the rate that you are willing to take for the money you invest. If you invest more than Ksh. 20 million, you must place a competitive bid.

In the event of a non-competitive bidding process, you accept the average rate of the accepted bids.


On the day of the auction, the CBK’s Auction Management Committee (AMC) meets and determines the cut-off rate it is willing to accept. For competitive calls for tenders, the offers included in the cut-off rate are accepted while those above the rate are rejected. If you choose to take the non-competitive offer, you will get the average rate of all accepted offers.

Once the auction is over, you will receive an SMS or email from CBK informing you of the results of your auction.


If successful, they will give you the amount you need to pay, the reference number, and the date you need to pay.

CBK accepts checks for amounts less than Ksh. 1 million. For amounts greater than Ksh. 1 million, you will need to make a bank transfer. You will need to transfer the amount to your CBK account in the same way as for other bank transfers. Successful applicants who fail to submit payments within the payment deadline may be prohibited from investing in government securities in the future.


Interest (coupons) on Treasury bonds is usually paid semi-annually. The published prospectus indicates the dates on which interest will be paid until maturity of the bond. Interest will be credited to your bank account on the dates specified.

Get your money back

At maturity, the investor will receive the last amount of interest and the nominal value of the Bond which will be credited to the bank account indicated when opening the CDS account. You can, however, choose to give CBK rollover instructions to purchase another bond to come with your product.


1. Investing in Treasury bonds presents little or no risk of default (governments rarely default).

2. Investing in T bonds provides a determinable income stream (you are almost guaranteed to receive your interest every 6 months)

3. Safer investment compared to stocks – Treasuries are attractive to risk averse investors who prefer low risk assets.

4. Kenya Treasury bonds are listed on the NSE and therefore offer an exit mechanism if their bonds have to be sold before maturity.

5. Under normal circumstances, treasury bills offer a higher yield than treasury bills.

6. In Kenya, there are long term bonds (up to 30 years) that can be used to invest for longer term goals, eg retirement, child rearing.

7. Infrastructure bonds are exempt from withholding tax, which increases the yield.

8. T bonds are auctioned monthly, making them an available investment option that can build a portfolio that earns them interest even monthly.


1. Treasury bonds are not capital protected. This means that their price on the NSE can go up and down and so if you want to sell your bond before maturity and the prices have gone down you could receive less than what you invested.

2. Long-term investing: You may have to wait up to 30 years for the bond to mature if, for example, you bought the 30-year bond and don’t want to sell it.

3. They require a minimum investment of Ksh. 50,000 for the fixed coupon and 100,000 KShs for infrastructure bonds, which can be high for some investors.

4. Bonds trade in multiples of Ksh. 50,000 on the secondary market (NSE). It means that you cannot buy or sell less Ksh. 50,000 and nothing more than that can only be in multiples of Ksh. 50,000.

5. The interest rate is based on demand and supply, when the government has lower demand or high investor supply, it can reduce the offered interest rate.

The current prospectus for government bonds can be viewed here

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