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

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 your transaction history whenever 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 over the life of the bond so the semi-annual interest payments from these bonds will stay the same.

Coupon rate is the rate of interest paid by bond issuers on the bond’s face value. It is the periodic rate of interest paid by bond issuers to its purchasers. The coupon rate is calculated on the bond’s face value. A bond’s face value is the amount the issuer provides to the bondholder upon the maturity of the bond.


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

2. Infrastructure bonds

These are used by the Government for infrastructure projects. These bonds in Kenya attract a lot of market interest because returns from them are tax exempt.


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

3. Zero coupon bonds

These are similar to Treasury bills, in that they are sold at a discount and do not have interest payments. They are typically 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 the Currency Centres in Meru, Nakuru, Nyeri and Kisii. Find details of the application process here

If you do not wish to open a CDS account with CBK, you can still invest in Treasury Bonds 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 via email.

Investing in Treasury Bonds

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

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

The minimum amount you can invest in is Ksh. 50,000 for the Fixed coupon bond and Ksh. 100,000 for the infrastructure bond. Secondary market trading at the NSE is in multiples of Ksh. 50,000.

Submitting your bid

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

In competitive bidding, you have to indicate the rate you are willing to take for the money you are investing. If you are investing more than Ksh. 20 million, you have to place a competitive bid.

In non-competitive bidding you accept the average rate of the accepted bids.


On the auction day, CBK’s Auction Management Committee (AMC) meets and, determines the cut-off rate they are willing to accept. For competitive bidding, bids within the cut-off rate are accepted while those above the rate are rejected. If you chose to take the uncompetitive bid, you will get the average rate of all the accepted bids.

Once the auction is complete, you will receive an SMS or email from CBK notifying you of the results of your bid.


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

CBK accepts cheques for amounts below Ksh. 1 million. For amounts above Ksh. 1 million, you will be required to do a bank transfer. You will need to transfer the amount to your CBK account the same way you do with other bank transfers. Successful applicants who fail to submit payments within the payment period may be barred from future investment in government securities.


Interest (coupon) on Treasury bonds is typically paid semi-annually. The published prospectus gives the dates when the interest will be paid until the maturity of the bond. Interest will be credited to your bank account on the specified dates.

Getting your money back

Upon maturity, the investor will receive the last interest amount and the face value of the Bond which will be credited to the bank account indicated when opening the CDS account. You may however choose to give roll-over instructions to CBK to purchase another upcoming bond with your proceeds.


1. Investing in T-bonds has little or no default risk at all (Governments rarely default).

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

3. Safer investment compared to equities-Treasury bonds are attractive to risk averse investors who prefer lower risk assets.

4. Treasury bonds in Kenya are listed on the NSE and hence provide an exit mechanism if one needs to sell their bond before maturity.

5. In normal circumstances, treasury bonds offer a higher return than treasury bills.

6. In Kenya there exist long term bonds (up to 30 years) that can allow one to invest for longer term objectives e.g. retirement, children education

7. Infrastructure bonds are exempt from withholding tax hence increasing return.

8. T-bonds are auctioned monthly making them an available investment option that can allow one to build a portfolio that pays them interest even monthly.


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

2. Long-term investment: You might have to wait up to 30 years for the bond to mature if for example you have bought the 30-year bond and do not want to sell it.

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

4. The bonds trade in multiples of Ksh. 50,000 on the secondary market (NSE). This means you cannot buy or sell less than Ksh. 50,000 and anything 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 less demand or the supply from investors is high, this can reduce the rate of interest offered.

The current Government Bonds Prospectus can be found here