Kenyans looking to invest in government securities have another opportunity to earn interest after the Central Bank of Kenya (CBK) announced a fresh Ksh 50 billion Treasury bond offer.
The latest offer targets individual and institutional investors, with the government seeking additional funds to support its budgetary requirements.
The bonds carry fixed coupon rates of 12.857 per cent and 12.5 per cent, although the actual return investors receive will depend on the price at which they purchase them.
In a prospectus dated November 9, 2026, the CBK, acting as the government’s fiscal agent, invited investors to submit bids for two reopened Treasury bonds. The application period runs until Wednesday, November 18, with the deadline set at 10am.
The reopening allows the government to raise additional money through bonds that have already been issued, rather than introducing entirely new securities. Investors purchasing the reopened bonds receive the same contractual interest payments attached to the original securities, subject to the purchase price and other applicable terms.
The first bond, identified as FXD1/2019/015, has approximately 7.3 years remaining before maturity. It carries an annual coupon rate of 12.857 per cent and is scheduled to mature on January 9, 2034.
The second bond, SDB1/2011/030, has approximately 14.3 years remaining before maturity. It offers a coupon rate of 12.5 per cent and will mature on January 21, 2041.
Both bonds attract a withholding tax of 10 per cent on interest payments. The interest rates represent the annual payments attached to the bonds, with investors receiving interest according to the payment schedule set by the government.
The CBK has set the minimum investment for non-competitive bids at Ksh50,000, allowing individual investors with relatively modest savings to participate in government borrowing.
Non-competitive bids have a maximum limit of Ksh50 million per investor account. Investors submitting competitive bids, on the other hand, must invest at least Ksh2 million per Central Securities Depository (CSD) account for each bond category.
Participation is restricted to investors with active DhowCSD accounts, the digital platform operated by the CBK for managing government securities.
The auction will follow a multi-price bidding system. This means successful competitive bidders pay according to the yields they offer rather than receiving one uniform price.
The central bank has also reserved the right to accept applications in full or partially, allocate bonds on a pro-rata basis or reject applications altogether.
Successful investors will receive their payment keys and the amounts payable through the DhowCSD Investor Portal or mobile application on Friday, November 20.
Settlement is scheduled for Monday, November 23, 2026. Secondary trading is also expected to begin on the same day, with the bonds listed on the Nairobi Securities Exchange (NSE). Investors will therefore have an opportunity to sell their holdings to other market participants instead of waiting until the maturity dates.
Investors can use bonds as loan security
The prospectus provides for investors to use their government securities as collateral when seeking credit from regulated financial institutions.
This arrangement allows bondholders to access financing without necessarily selling their investments. However, investors must understand the conditions attached to pledging securities.
The CBK has also provided a rediscounting facility for investors who need to access their money before maturity. However, the facility is considered a last resort because it attracts a rate set three percentage points above the prevailing market yield or the bond’s coupon rate, whichever is higher.
Both securities qualify towards statutory liquidity ratio requirements for commercial banks and non-bank financial institutions under the Banking Act.
Coupon rates do not guarantee actual returns
Although the two bonds offer attractive interest rates, investors need to consider more than the advertised coupon rates before committing their money.
Treasury bonds are traded at prices that can be higher or lower than their face value. Consequently, the price an investor pays determines the actual yield earned from the investment.
For example, purchasing a bond above its face value reduces the effective return compared with buying it at par, while purchasing it below face value can increase the yield, assuming the bond is held to maturity.
Investors who sell before maturity may also receive less than they initially invested if prevailing market interest rates have risen and bond prices have fallen.
The latest offer follows strong demand during an earlier September Treasury bond auction, when investors submitted bids worth Ksh68.19 billion against a Ksh60 billion target. The CBK accepted Ksh47.75 billion.
The new Ksh50 billion offer gives the government another avenue to raise domestic financing while providing investors with an opportunity to earn interest from government securities.
Investors are advised to examine the prospectus, including the pricing tables, payment dates, taxation requirements and conditions for early disposal, before submitting their applications.
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