Treasury bonds are a popular investment option in Kenya, offering investors a secure and relatively high-yielding way to lend money to the government.
To purchase Treasury bonds, investors must go through a straightforward bidding process with the Central Bank of Kenya.
Successful bidders then need to fund their accounts by the settlement date to complete the transaction.
Importantly, understanding the steps to place a treasury bond bid is key for Kenyan investors looking to diversify their portfolios with this government-backed security.
What are treasury bonds?
Treasury bonds are a secure, medium- to long-term investment that offer investors interest payments every six months throughout the bond’s maturity.
They enable the government to raise significant capital to support initiatives such as infrastructure development.
In Kenya, the Central Bank auctions treasury bonds on a monthly basis, and they are listed on the Nairobi Securities Exchange for secondary trading.
Most treasury bonds in Kenya are fixed rate, meaning the interest rate determined at auction is locked in for the entire life of the bond.
Treasury bonds are considered a secure investment as they are units of government debt, and they provide consistent and regular returns through the semi-annual interest payments.
Investors can choose from various types of treasury bonds to suit their investment needs.
How to place a bid for treasury bonds
Follow the steps below when placing a bid for treasury bonds;
- After you log in to the DhowCSD Portal, menu items are displayed on the left side of the screen.
- Click on the Auctions menu item and a list of securities available for Auction are displayed.
- Once you decide on preferred security, click on create bid tab against the selected security and a Place New Bid template will pop-up.
- On the left top side of the bid form, you can opt to either place a Competitive or Non-Competitive Type of bid.
- Fill in face value in Amount field.
- Fill in desired rate in Yield field (applicable only to Competitive option)
- The Bid broker field is defaulted to None (however, you may select a broker from options provided when submitting a bid for Bond securities only)
- Source of funds field select either Local or Offshore
- Specific source of funds field selects either Maturing T-Bill/T-Bond, Others or Salary. If you opt for Others you will be required to provide specific detail in Additional information field e.g., farming or Retail Business
- Accept Legal and Fund terms by checking the boxes.
- Click on Place Bid tab at the bottom right side and details of bid will be displayed for you to confirm before completing the process.
- After input of received OTP number, system will allow submission of bid.
- Click on the Bids menu and system displays your bid(s) with status as submitted.
- You will receive notification via SMS or email indicating details of new bid created.
