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INVEST

Invest in Government Securities

Government securities are considered as risk-free investments. Government securities provides you with a return and/or a consistent source of income over a specified period of time. Investors who buy these securities are loaning money to the government, which promises to repay those investors after a specified period of time, called maturity.

Investing in government securities is a simple process that you can undertake through the Central Bank directly or through a commercial bank or an investment bank.

Government Securities in Kenya

In Kenya, the National Treasury offers two types of government securities: Treasury bills and Treasury bonds.

Invest in Treasury Bills

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Invest in Treasury Bonds

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Treasury bills are a short-term investment, with maturities of 91 days, 182 days and 364 days. This means that if you invest money in a Treasury bill, you will receive that money back within three months, six months or one year, depending on the bill you choose.

Investors make money on Treasury bills because they are sold at a discount. For example, if you invest in a 91-day Treasury bill, you will pay less than the bill’s face value, but after 91 days you will receive the full face value.

If you’d like to purchase a Treasury bill, you must invest a minimum of Kshs. 100,000.

Treasury bonds are medium- to long-term investments, and their maturity can range from one year to 30 years. There are many different types of Treasury bonds, but their basic operations are similar.

Investors buying Treasury bonds are loaning the government money for a specified period of time, which is the bond’s maturity. With most bonds, investors will receive interest payments every six months throughout that period of time, and at the end of that period they receive the face value amount that they invested.

If you’d like to purchase a Treasury bond, you must invest a minimum of Kshs. 50,000.

Who can Invest

While commercial banks, corporate entities and pension schemes are some of the largest investors in government securities, individuals can invest directly through the Central Bank.

If you’re interested in investing in government securities you must have a bank account with a commercial bank in Kenya, and you must open a CDS account with the Central Bank. Kenyans and foreign investors who meet these qualifications are free to invest in government securities directly with the Central Bank.

Those who do not wish to open a CDS account with the Central Bank can still invest by opening a client account with their commercial bank, which will invest on their behalf. However, while opening a CDS account is free, commercial banks typically have fees associated with client accounts.

Kenyans living abroad can invest in government securities 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.

Investment Information for Kenyans Living Abroad

Download a Step-by-Step Guide for Investing in Government Securities for Kenyan Diaspora HERE.

CDS Account Opening Form (Individual)

If you are an individual investor, print the CDS Account Opening Form and fill in all details. Ensure that all the required fields are properly completed. Instructions for completing the form can be found on the Invest in Treasury Bills and Invest in Treasury Bonds pages.
Download CDS Account Opening Form HERE.

CDS Account Opening Form (Corporate)

If you are an individual investor, print the CDS Account Opening Form and fill in all details. Ensure that all the required fields are properly completed. Instructions for completing the form can be found on the Invest in Treasury Bills and Invest in Treasury Bonds pages.
Download CDS Account Opening Form HERE.

Treasury Bills Application Form

To bid for Treasury Bills, please download the Treasury Bills Application form, found HERE. Print the form, ensure that all the required fields are properly filled in, then scan the completed form and email it to applications@centralbank.go.ke.

Treasury Bonds Application Form, Including Infrastructure Bonds

To bid for Treasury Bonds, please download the Treasury Bonds Application form, found HERE. Print the form, ensure that all the required fields are properly filled in, then scan the completed form and email it to applications@centralbank.go.ke.

For enquiries please contact Central Bank of Kenya, Financial Markets Department on 2860000/3640/3641 or send an email to applications@centralbank.go.ke.

Investors who are not Kenyan and are not Kenyan residents can invest in government securities, but must do so as a nominee of a local commercial bank, an investment bank or a stockbroker.

 

 

Accessing Funds Before Maturity

Investors who need to redeem their securities before they mature can rediscount those securities as a last resort. The Central Bank will buy the securities back, but do so at a punitive rate to discourage investors from doing this, and recommends that investors hold their securities until maturity if at all possible.

Treasury bonds are traded on the secondary market, giving bond holders the opportunity to receive money for their security without rediscounting. Treasury bills, however, are not traded on the secondary market. Both types of securities can be transferred to other parties.

Rediscounting

Treasury Bills

The scope of Treasury bills rediscount is to avail funds to Treasury bills investors who may wish to recall their investments before maturity. It is a last resort facility. To rediscount a Treasury bill, send a written request to the Bank with the following documents: CDS statements, a photocopy of the identity document, pay-in slip. For a company, a letter of incorporation is required. The investor submits a duly filled sale confirmation form.

Treasury Bonds

Treasury bond rediscounting avails funds to Bond investors who may wish to recall their investments before maturity and at the same time have failed to secure a buyer of the same in the secondary market. It is available at CBK as a last resort.
A letter is required from the Nairobi Stock Exchange together with the following documents: CDS statements, a photocopy of the identity document, pay-in slip and certificate of incorporation in case of companies.

Third Party Claims

If an investor passes away before all of his or her investments mature, third parties can claim that investor’s outstanding securities by submitting documents establishing that they should be the bona fide recipients of the securities. The Central Bank’s legal division will verify the documents and Monetary Operations and Debt Management division will process any withheld and future payments to the claimant.

Third Party Claims

Procedures for Processing Third Party Claims Relating to Deceased Investors’ Investments

1. Claimant(s) to notify the Central Bank of Kenya of the death of the deceased in writing.

2. The Bank will advise the claimant(s) on the prerequisite documents to submit to facilitate processing of any payment of funds withheld and also to aid in subsequent payments for interest or redemption for outstanding government securities. The claimant should forward the following under-listed original and copies of documents:

•    Original and copy of the Certificate of Confirmation of Grant from the High Court which should explicitly specify the CDS account amongst the properties described in the schedule of assets
•    Original and copy of letter of Administration from the High Court
•    Original and copy of the claimant(s) Identity card
•    Original and copy of the Claimant(s) Pin Certificate
•    Details of the claimant(s) bank account including bank name, branch and account number
•    Indemnity form duly completed by the claimant(s) and signed off by a Commissioner of Oaths (form issued by the Central Bank of Kenya)

NB: The copies of the attached documents to be verified and certified as true copies of the original by the Front Office staff and the Branch Manager (if the documents are presented at the branches or currency centres), then the documents are to be forwarded to MO&DM division for processing. The original documents shall be released back to the claimant upon certification.

3. After the documents have been successfully verified by our legal division, the claimant(s) will receive payment for withheld funds while payments for outstanding securities will be paid after each interest/redemption payment.

4. In order to better manage long term outstanding securities the claimant(s) is advised to open a CDS account in their own name where the securities from the deceased investor’s account can be transferred. This will enable the claimant to liquidate the security before maturity.