Kenyans Can Now Invest in Government Treasury Bonds Starting from Just Ksh 50,000

The Central Bank of Kenya (CBK) has launched an attractive investment opportunity for Kenyans, announcing the reopening of two long-term Treasury bonds that allow citizens to participate in the country’s development agenda with investments starting from as low as Ksh 50,000. This move represents a significant effort by the government to democratize investment opportunities and engage ordinary citizens in national economic development.

In a comprehensive public prospectus released on Friday, September 26, 2025, CBK Governor Kamau Thugge announced that the bond sale is targeting to raise Ksh 50 billion, specifically aimed at supporting the government’s budgetary needs for the 2025/26 financial year. The initiative comes at a crucial time when Kenya is seeking to strengthen its fiscal position and reduce reliance on external borrowing.

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Understanding Treasury Bonds

Treasury bonds are long-term debt securities issued by governments to finance various development projects and budgetary requirements. They are considered among the safest investment options available because they are backed by the full faith and credit of the government. For Kenyan investors, these bonds offer a predictable income stream through regular interest payments, known as coupon payments, and the return of principal upon maturity.

The Central Bank of Kenya, acting in its capacity as fiscal agent for the Republic of Kenya, has structured this offering to appeal to both retail and institutional investors. “The Central Bank of Kenya, acting in its capacity as fiscal agent for the Republic of Kenya, invites bids for the above bonds whose terms and conditions are as follows,” the official notice stated.

Two Distinct Investment Options

The apex bank has outlined the reopening of two fixed-coupon Treasury bonds with different maturity periods, catering to investors with varying investment horizons and risk appetites.

Medium-Term Bond: FXD1/2018/015

For investors seeking medium-term returns with substantial interest earnings, the FXD1/2018/015 bond presents an excellent opportunity. This bond offers an attractive coupon rate of 12.65% and has 7.7 years left until it matures in May 2033. This makes it ideal for investors who want relatively shorter commitment periods while still enjoying competitive returns.

The bond attracts an Accrued Interest (AI) of Ksh 5.3519 per Ksh 100 of investment, with a standard 10% withholding tax applied on the clean price. To better understand how this works in practice, consider this example: If the quoted yield is 12.6500%, the dirty price (the total amount you pay) is calculated as the clean price (Ksh 99.9746) plus the Accrued Interest (Ksh 5.3519), totaling Ksh 105.3265 per Ksh 100 of face value.

This means that for every Ksh 50,000 invested, an investor would earn Ksh 6,325 annually in interest payments, providing a steady income stream over the bond’s remaining life. This calculation is based on the coupon rate and represents the annual return before taxes.

Long-Term Bond: FXD1/2021/020

For long-term investors with a more patient investment strategy, the FXD1/2021/020 bond offers even more attractive returns. With a generous coupon rate of 13.444%, this bond matures in July 2041, giving it approximately 15.9 years remaining until maturity. This longer-term option is particularly suitable for investors planning for retirement, education funds, or other long-term financial goals.

The bond attracts an Accrued Interest (AI) of Ksh 2.5854 per Ksh 100, with the same 10% withholding tax structure applied on the clean price. Using a practical example: If the quoted yield is 13.4440%, the dirty price is calculated as the clean price (Ksh 99.9484) plus AI (Ksh 2.5854), totaling Ksh 102.5338 per Ksh 100 of face value.

For investors putting in the minimum Ksh 50,000, the annual interest earnings would be approximately Ksh 6,722 before tax, representing a compelling return in the current investment landscape. Over the full life of the bond, assuming the investor holds it until maturity, the total interest earned would be substantial, making it an attractive option for wealth accumulation.

How to Participate: Types of Bids

The CBK has designed a flexible bidding system to accommodate different types of investors, from individuals making their first investment to large institutional investors managing significant portfolios.

Non-Competitive Bids

Non-competitive bids are ideal for individual investors and smaller entities who want to guarantee their participation without having to compete on price. Under this structure, an individual or entity can invest up to Ksh 50 million per Central Securities Depository (CSD) account per tenor. This limit ensures that retail investors can participate meaningfully while preventing any single small investor from dominating the allocation.

However, State corporations, public universities, and Semi-Autonomous Government Agencies (SAGAs) are exempt from this Ksh 50 million limit, allowing them to invest larger amounts to meet their investment mandates and treasury management objectives.

The advantage of non-competitive bids is their simplicity and certainty. Investors who submit non-competitive bids are guaranteed allocation at the weighted average yield determined during the auction, removing the uncertainty associated with competitive bidding.

Competitive Bids

For more sophisticated investors who want to specify the yield they are willing to accept, competitive bids offer greater flexibility. The minimum amount for a competitive bid is Ksh 2 million per CSD account per tenor. This higher threshold reflects the more complex nature of competitive bidding and is typically utilized by institutional investors, fund managers, and high-net-worth individuals.

In competitive bidding, investors specify both the amount they wish to invest and the yield they are willing to accept. The CBK then allocates bonds starting with the lowest yields (most favorable to the government) until the target amount is reached. This means that investors bidding at yields that are too high may not receive any allocation.

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Important Dates and Timeline

To ensure successful participation, investors must carefully note the following critical dates:

• Sale Period: September 26 – October 15, 2025
• Bid Submission Deadline: Wednesday, October 15, 2025, at 10:00 a.m.
• Auction Date: October 15, 2025
• Payment Information Access: October 17, 2025, via DhowCSD App/Portal
• Settlement Date: October 20, 2025

The settlement date of October 20 is particularly important because this is when successful bidders must make payment for their allocated bonds. “All successful bidders should obtain the payment key and amount payable from the CBK DhowCSD Investor Portal/App under the Transactions tab on Friday, October 17, 2025,” CBK emphasized in its notice.

Interest earned from these investments is subject to a standard 10% withholding tax, which is automatically deducted before payment. This tax treatment is relatively favorable compared to other income sources and makes Treasury bonds even more attractive from a tax-efficiency perspective.

Digital Investment Platform

Payments for successful bids must be made through the CBK DhowCSD Investor Portal or mobile app by Friday, October 17, 2025. This digital platform has revolutionized how Kenyans invest in government securities, making the process more accessible and transparent than ever before.

The DhowCSD system allows investors to open accounts, submit bids, make payments, and track their investments all from their smartphones or computers. This eliminates the need for physical visits to bank branches and reduces the paperwork traditionally associated with bond investments. The platform also provides real-time updates on auction results and investment performance.

Secondary Market Trading Opportunities

One of the significant advantages of these Treasury bonds is their liquidity. Secondary trading for both bonds (in multiples of Ksh 50,000) will commence on Tuesday, October 21, 2025. This means that investors who need to access their funds before maturity can sell their bonds to other investors on the secondary market.

The secondary market provides flexibility and liquidity, addressing one of the traditional concerns about long-term bond investments. Investors can exit their positions if their circumstances change, though the price they receive will depend on prevailing market conditions and interest rates at the time of sale.

Rediscounting Facility

For investors facing emergency situations who need immediate liquidity, CBK offers a rediscounting facility as a last resort option. However, this facility comes at a cost: rediscounting is available at 3% above the prevailing market yield or the coupon rate (whichever is higher). Requests for rediscounting must be sent via email to: rediscounts@centralbank.go.ke

This premium rate ensures that rediscounting is used only when absolutely necessary and encourages investors to utilize the secondary market instead, which typically offers better pricing.

Risk and Compliance Considerations

The Central Bank has implemented strict compliance measures to ensure the integrity of the bond issuance process. CBK has warned that defaulters—investors who fail to pay for allocated bonds—may be suspended from participating in future government securities offers. This policy protects the credibility of the auction system and ensures that only serious investors participate.

Furthermore, “The Central Bank reserves the right to accept applications in full or in part, or reject them in total without giving any reason,” the bank stated. This discretionary power allows CBK to maintain control over the issuance and ensure that the bonds are distributed in a manner consistent with government policy objectives.

The bank has also noted that the bonds may be reopened at a future date, providing additional opportunities for investors who miss the current sale window or wish to increase their holdings.

Why Invest in Treasury Bonds?

Treasury bonds offer several compelling advantages for Kenyan investors:

1. Safety and Security: Backed by the government, these bonds carry minimal default risk, making them one of the safest investment options available in Kenya.
   
2. Predictable Returns: The fixed coupon rates mean investors know exactly how much interest they will receive, facilitating better financial planning.
   
3. Higher Returns than Savings Accounts: With rates of 12.65% and 13.444%, these bonds offer significantly better returns than traditional bank savings accounts, which typically offer single-digit interest rates.
   
4. Portfolio Diversification: Bonds provide diversification benefits when combined with other investments like stocks, real estate, or business ventures.
   
5. Supporting National Development: By investing in Treasury bonds, Kenyans directly contribute to funding crucial government projects and services, from infrastructure development to education and healthcare.
   
6. Accessible Minimums: The Ksh 50,000 minimum for secondary market trading makes these bonds accessible to middle-income earners, not just wealthy investors.
   

Economic Context

The reopening of these Treasury bonds comes at a time when Kenya is working to stabilize its economy and manage its debt sustainably. By raising funds domestically through Treasury bonds, the government reduces its reliance on external borrowing, which often comes with currency risk and potentially higher costs.

Governor Kamau Thugge, who has been leading Kenya’s monetary policy with a focus on stability and growth, has consistently emphasized the importance of developing deep domestic capital markets. This bond offering is part of that broader strategy to create more investment opportunities for Kenyans while meeting government financing needs.

How to Get Started

For investors interested in participating in this bond offer, the process is straightforward:

1. Open a CSD Account: If you don’t already have one, open a Central Securities Depository account through the DhowCSD platform or through authorized banks and stockbrokers.
   
2. Submit Your Bid: Use the DhowCSD Investor Portal or App to submit either a competitive or non-competitive bid before the October 15 deadline.
   
3. Await Results: Auction results will be communicated through the platform on October 15.
   
4. Make Payment: If successful, access your payment information on October 17 and complete payment by October 20.
   
5. Track Your Investment: Monitor your investment and receive interest payments through the DhowCSD platform.
   

Customer Support and Inquiries

For additional information or assistance with the investment process, investors can contact the Central Bank of Kenya’s Financial Markets Department at 2860000. The bank also maintains physical branches in Mombasa, Kisumu, and Eldoret, as well as Currency Centers in Nyeri, Meru, Kisii, and Nakuru where investors can receive in-person guidance.

Conclusion

The reopening of these Treasury bonds represents a significant opportunity for Kenyans to grow their wealth while contributing to national development. With attractive interest rates, accessible minimum investments, and the backing of the government, these bonds offer a compelling investment proposition for both new and experienced investors.

Whether you’re planning for retirement, saving for a major purchase, or simply looking for better returns than traditional savings accounts, these Treasury bonds deserve serious consideration. The combination of safety, returns, and accessibility makes them an excellent addition to any investment portfolio.

As Kenya continues to develop its capital markets and create more opportunities for citizen participation in economic growth, initiatives like this bond offering demonstrate the government’s commitment to inclusive financial development. For investors willing to take advantage of this opportunity, the potential for steady, reliable returns over the medium to long term is substantial.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

2nd October, 2025