Kenya's Treasury Bonds and Bills have long been trusted by banks, insurers, and investors seeking safe returns. Surging interest rates and digital access platforms have transformed government securities from a sleepy corner of finance into an attractive, accessible opportunity.
The yield on Kenya 10Y Bond Yield held steady at 13.13% on October 31, 2025. Historically, the Kenya 10-Year Government Bond Yield reached an all time high of 19.40 in April of 2024. The Kenya 10-Year Government Bond Yield is expected to trade at 13.02 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations.
Let's delve into the specifics of these financial instruments.
Treasury Bills (T-Bills)
Treasury Bills (T-Bills) are short-term government securities that mature in a year or less. In Kenya, the Central Bank (CBK) traditionally issued 91-day, 182-day, and 364-day T-Bills. Notably, from 2025 the 364-day bill is being phased out to reduce short-term debt.
T-Bills do not pay periodic interest; instead, they are sold at a discount to their face (par) value. For example, an investor might pay KES 95,000 for a 1-year bill that will pay KES 100,000 at maturity - the KES 5,000 difference is the earned interest.
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Because of their short tenor, T-Bills are often seen as low-risk, quick-return investments - ideal for parking funds short-term.
Treasury Bonds (T-Bonds)
Treasury Bonds (T-Bonds) are the medium to long-term instruments, with maturities ranging from 1 year up to 30 years. Most Kenyan T-Bonds are fixed-rate, meaning the interest (coupon) rate is set when the bond is first issued and remains the same throughout its life.
Investors in bonds receive interest payments every six months (semi-annually), and the principal (face value) is paid back at maturity. For example, a 5-year bond might pay a 12% annual coupon, so an investor who buys KES 100,000 face value would get KES 6,000 every six months, and the KES 100,000 back after 5 years.
The CBK auctions bonds less frequently than bills - usually monthly (with specific bonds offered as per a published schedule).
Схема кривой доходности.
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Fluctuations in Rates
In 2024, Kenya's T-Bill rates climbed dramatically. By July 2024, the 91-day T-Bill was about 16%, with the 182-day at 16.8% and 364-day near 16.9% - extraordinarily high yields by historical standards. This was fueled by government borrowing needs and tighter liquidity.
These attractive rates spurred many investors (including retail and fintech treasuries) to rush into T-Bills for the high returns. However, heading into 2025, rates have started falling again as the Central Bank eased monetary policy.
By February 2025, the 91-day yield dropped below 9% (for the first time since late 2022), with the 182-day around 9.4% and the last issued 364-day about 10.6%. The decline is partly due to CBK actively rejecting expensive bids to lower the government's borrowing cost and a cut in the benchmark interest rate.
For bonds, yields also fluctuated - long-term bond auctions in late 2024 saw rates well into double digits (some infrastructure bonds had coupons in the 14-15% range).
Changes in Debt Management
In a bid to manage debt maturity risk, the National Treasury announced in early 2025 that it will stop issuing new 364-day T-Bills. Investors will now only see 91-day and 182-day bills in auctions. This reform is intended to lengthen the debt profile and reduce the frequent refinancing hump caused by one-year instruments.
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For investors, this means those who want a one-year risk-free investment might need to either buy two consecutive 6-month bills or consider a short-term bond instead.
Digital Accessibility: DhowCSD and Treasury Mobile Direct
A game-changer in accessibility has been the Central Bank's launch of the Dhow Central Securities Depository (DhowCSD) in 2023. This is an online portal and mobile app that allows investors to open a CDS account remotely and bid on auctions directly. Individuals and corporates no longer need to physically fill forms at banks or hire brokers for a basic investment - they can do it all through a smartphone or computer.
Additionally, the Treasury Mobile Direct (TMD) USSD service complements this, enabling even those without smartphones or internet to invest via a simple mobile phone menu. These innovations have led to a surge in retail investor participation, leveling the playing field.
Banks and intermediaries that used to dominate these markets have noted the change - in fact, retail investors have started to outbid banks on T-Bills in some instances.
M-Akiba: A Pioneer in Mobile Bonds
Kenya was a pioneer with M-Akiba, a special 5-year infrastructure bond launched in 2017 that was sold exclusively via mobile money. The minimum investment was just KES 3,000, dramatically lower than the usual threshold, aiming to include more Kenyans. M-Akiba offered around 10-12% interest, tax-free, and proved that micro-investors would participate if given the chance.
While M-Akiba had some challenges (awareness and technical hitches limited its uptake), it laid groundwork for the current digital channels. Today's bond auctions sometimes tap similar retail-friendly approaches - for example, infrastructure bonds often attract thousands of retail bids through DhowCSD.
M-Akiba, a special 5-year infrastructure bond launched in 2017 that was sold exclusively via mobile money.
Scale of Domestic Debt
To appreciate scale - as of January 2024, Kenya's domestic debt was KES 5.89 trillion, of which 85% are Treasury Bonds (KES 4.88 trillion) and about 15% Treasury Bills (KES 844.8 billion). This skew toward bonds reflects heavy government reliance on long-term borrowing. For investors, it also means the secondary market for bonds is larger and more liquid.
In recent times, subscription levels indicate strong appetite: T-Bills are often oversubscribed (investors bidding more than offered), though the 364-day was becoming less popular due to expectation of its removal. T-Bonds, depending on tenor and terms, also see robust demand, with infrastructure bonds typically getting very high subscriptions (investors love the tax-free interest).
Investing in Treasury Bills and Bonds: A Step-by-Step Guide
Investing in Treasury bills or bonds in Kenya is a straightforward process that has been greatly simplified by digital tools.
- Open a CDS Account: You need a Central Depository & Settlement (CDS) account with the Central Bank of Kenya. This is essentially your account for holding government securities. Opening a CDS account is free. Today, you can do this online via the DhowCSD web portal or mobile app. Alternatively, you can still open one through any Kenyan commercial bank or investment broker, but the direct route is quicker for the tech-savvy.
- Stay Informed: Keep an eye on what's on offer. Every week, CBK announces the T-Bills on auction (91 and 182-day, plus any special issues). Each month, CBK issues a bond prospectus detailing the bonds on offer - this might be a new bond or a re-opened issue of an existing bond. The prospectus will tell you the bond's term (e.g. 5-year, 15-year), coupon if it's a fixed rate or the formula if floating (though floating rate bonds are rare in Kenya), tax status (e.g. infrastructure bond or not), and the auction and value dates.
- Place Your Bid:
- Non-Competitive Bid: This is the simplest - you just say how much money (face value) you want to invest, and you agree to accept whatever yield the auction clears at. Non-competitive bids are limited to KES 50,000 minimum and up to KES 20 million for individuals (to ensure big players don't abuse this). Almost all retail investors and smaller institutions use this method.
- Competitive Bid: Here you specify the exact rate/price you want. Big institutions use this to try to lock in higher yields. Minimum for competitive is KES 2,000,000. If you bid too high a rate (wanting a low price), you risk getting nothing if the auction clears lower. If you bid at or below the cutoff, you'll get your amount (maybe pro-rated).
- Submit Your Bid: Using DhowCSD Portal/App or USSD, you can enter your bid. For example, via the app: select the auction (e.g. "182-day T-Bill Issue No. XYZ"), choose competitive or non-competitive, enter the amount, and if competitive, enter your desired rate. Through USSD (Treasury Mobile Direct), you'd follow text prompts to do the same. Traditionally, one could also fill out a physical form and drop it at a CBK or bank branch, but digital channels have made this obsolete for most.
- Wait for the Results: CBK will announce results (usually same day for bills, or next day for bonds). You can check on the portal if your bid was successful and how much to pay. Payment is typically due by the Monday (settlement day) after a Thursday auction for T-Bills (or a few days after bond auction, as specified). Payment is made via your commercial bank - you'll get instructions to pay into a CBK account, quoting your CDS number and bid details. Some banks have integrated this so that if you have an account with them, you can just authorize a debit.
- Receive Payments: For T-Bills, you'll get the full face value back at maturity (automatically paid to your bank account or a CBK account that then sends to you). You can then reinvest in a new bill if you want. For T-Bonds, CBK will send interest payments to your bank every six months.
- Reinvest for Compound Growth: A neat feature for active investors: if you have, say, a T-Bill maturing the same week you're bidding on a new one, you can combine (net off) the transactions - instruct CBK to take the maturity proceeds and automatically apply them to the new purchase, so you only pay or receive the difference.
- Liquidation: If at any point you or your company needs to liquidate the investment before maturity, you can sell the security. T-Bonds are listed on the exchange (NSE) and can be sold through any broker; the prices will depend on market yields at that time (you might get a capital gain or loss). T-Bills aren't traded on the exchange, but CBK allows a procedure called rediscounting - essentially, CBK will buy back the bill at a rate 3% above the current market yield, which is a way to get out early (though 3% penalty in yield terms means you'll get a bit less).
Benefits of Investing in Kenyan Government Securities
Treasury bills and bonds are considered virtually risk-free in terms of default - the Kenyan government backs them, and it has a strong record of honoring domestic debt. This makes them an excellent place to park idle corporate cash or reserve funds.
For example, a payments company that holds customer balances or a startup that has raised funds and is waiting to deploy them can earn interest in T-Bills in the interim. Rather than leaving money in a current account (which may pay near-zero interest) or a short fixed deposit, T-Bills provide a government-guaranteed return.
In recent years, T-Bills often offered better rates than many alternative low-risk investments. At one point in 2023-2024, 3-month bills were yielding more than money market funds and bank deposits. Even after the pullback, a ~9% risk-free return in early 2025 is still compelling. Longer T-Bonds frequently offer double-digit coupon rates.
For fintech firms, this is a chance to enhance treasury income. It's no surprise that demand has been high - Kenya's T-Bills saw oversubscriptions with investors (including fintech treasuries) seeking these secure yields.
For those that invest in bonds, the semi-annual interest payments can provide a steady income. This could benefit fintech startups looking for predictable cash flow to cover certain expenses. For instance, investing surplus capital in a 2-year bond at 12% will yield interest every six months that could be used to offset operating costs.
Infrastructure bonds, in particular, are prized because their interest is tax-free - meaning if you get a 12% coupon, you keep the full amount, versus a normal bond where you'd net about 10.2% after 15% withholding.
Government securities can add stability to an investment portfolio that might otherwise be heavy in equities, startups, or other higher-risk ventures. For fintech founders and employees, holding some T-Bonds in their personal investment mix can offset the risk of their company stock or private business.
For fintech firms that manage investment products or treasury, holding some government paper is a way to diversify risk. It's a counterbalance to the volatility that sectors like crypto, equities, or even real estate can have.
Banks in Kenya often accept Treasury bonds as collateral for loans, given their secure nature. A fintech company could potentially borrow against its bond holdings for short-term needs rather than sell them. Even regulators often allow government securities to count towards liquidity or capital requirements for financial institutions due to their safety.
Investing in Treasury bonds, especially infrastructure bonds, means your money is helping fund national development projects - roads, energy, technology infrastructure, etc.
Risks Involved
Here are some of the risks involved in investing in Kenyan Treasury Bonds and Bills:
- Interest Rate Risk: This is the big one for bonds. If you buy a long-term bond and later interest rates in the market rise, the value of your bond will fall if you try to sell it. For example, suppose you hold a 10-year bond with a 12% coupon, and two years later new 10-year bonds are paying 15%. Your bond would be less attractive unless sold at a discount. If you can hold to maturity, you still get your principal back, but on paper you might have an unrealized loss in between. T-Bills have minimal interest rate risk due to their short lifespan - they're usually held to maturity and just pay out, but even they can lose a bit of value if sold early in a higher-rate environment. The Kenyan market saw this in 2022-2023 when interest rates rose; anyone holding older bonds at 10-12% saw their market prices drop.
- Inflation Risk: If inflation skyrockets above your bond's interest rate, your real (inflation-adjusted) return is negative. Kenya's inflation has been variable, but generally if you're earning 10% and inflation is, say, 8%, your real return is 2%. This is still positive, but if inflation were to jump into double digits, it could erode the value of the fixed interest payments. Currently, yields have been high partly because inflation and policy rates were high, so investors were compensated. Going forward, if inflation falls faster than yields, these government securities could actually give very healthy real returns (which is positive for investors).
- Reinvestment Risk: T-Bills return your money in a short time. If at that future point rates are lower, you might have to reinvest at a lower yield - that's reinvestment risk. Conversely, if rates are higher, it's great for new investments but any existing fixed-rate bonds are relatively less attractive. For fintech treasuries rolling over bills, a falling interest rate environment will gradually reduce the interest income as each new auction yields a bit less.
- Opportunity Cost: There's also the opportunity cost that funds tied in even for 6 or 12 months can't be used elsewhere if suddenly a high-impact opportunity or need arises.
- Liquidity Risk: While an individual can sell a KES 100k bond easily, if a company builds a very large position and then needs to liquidate a huge amount quickly, the market might not absorb it without discounting the price. This is more a concern for big institutional players or if a fintech company had tens of billions in bonds (unlikely for now). Still, understanding that the secondary market has its own demand/supply is important.
- Default Risk: For domestic Kenyan government debt, this risk has historically been extremely low - Kenya has never outright defaulted on its shilling Treasury bills or bonds. The government can (and does) roll over debts.
How To Place Bids For Treasury Bonds & Bills Using The CBK DhowCSD Portal | How To Use DhowCSD CBK
Traditional savings accounts often yield low or negative returns, which may explain why many poor households do not take up these products to boost their savings. Although bank accounts provide a safe place for savings, the interest earned on these accounts is often zero and transaction costs (such as withdrawal fees, minimum balances, or the distance a client needs to travel to reach a branch) are high. As a result, encouraging people to save requires expanding access to products with higher returns as well as lowering the transaction costs for using these products.
Researchers discontinued the evaluation due to difficulties encountered during implementation. Take-up of M-Akiba was low due to investors’ lack of awareness about the bond. Furthermore, there were initial logistical issues with the mobile money networks on which M-Akiba is traded, resulting in many unsuccessful purchase attempts by investors.
T-Bonds are like long-term IOUs from the Kenyan government. Like a baobab tree that grows slowly but surely, T-Bonds provide consistent, predictable returns over time. T-Bonds are backed by the full faith and credit of the Kenyan government.
T-Bonds often offer returns that outpace inflation, helping your money maintain its purchasing power.
Total return: Ksh 189,700.
Current T-Bond Rates: Rates vary depending on the specific bond issue, but they're generally higher than T-Bill rates.
Open a CDS Account: This is your golden ticket to the bond market.
Wait for the Results: If your bid is successful, congratulations!
Alternatively, you can gain exposure to T-Bonds through the KCB Money Market Fund.
Ladder Your Bonds: Invest in bonds with different maturity dates.
Match Bonds to Goals: Align your bond maturities with your financial goals.
Stay Informed: Keep an eye on interest rate trends and economic news.
Diversify: While T-Bonds are safe, mix them with other investments for a well-rounded portfolio.
Remember, while T-Bonds offer steady returns and high security, they may offer lower returns compared to riskier investments like stocks.
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