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Steps to Investing in Treasury Bonds in Kenya.


Date Posted: 3/17/2019 4:41:30 PM

Posted By: Chessjohn  Membership Level: Bronze  Total Points: 42

Treasury bonds are simply the units of government debt. So when one invests in treasury bonds it is just like investing with the government itself.

In Kenya,individuals or corporations can both invest in treasury bonds.Investing in treasury bonds is a very wise investment choice since it is a long term source of income which is very predictable because the treasury bonds are mostly offered on a fixed rate thus enabling one to be able to calculate the interests amount.

Interest payments once you have invested in treasury bonds are received semi annually.In Kenya,treasury bonds are auctioned monthly giving more investment opportunities for the investors.

Steps to Investing in Treasury Bonds in Kenya.

1.Open a CDS account.
This is a Central Depository System.
Here you will need to have an account with a Kenyan commercial bank which will link you as an individual with the Central Bank of Kenya.

2. Make bond type investment decision.
This is where you consider

what is available in the coming auction and its time period.
The types of treasury bonds generally available in Kenya are:
A.Fixed Coupon treasury bonds–
This implies that the interest received by this type of bonds does not change with time.
B.Infrastructure bonds–
This are bonds which specifically cater for infrastructural projects in the country.
This bonds also have tax exempt returns.
C.Zero Coupon bonds–
They are bonds that are sold at a discount and do not have interest payments.
They also run for a short period of time.

3. Complete and submit an application form.
This is a form containing the bond issue number, your name, source of your funds that you are about to invest with, CDS account number, your telephone number, the duration of the investment.

4. Getting the auction results.
After every auction of treasury bonds why usually takes place on Mondays, the results are later published in the Daily newspaper.
Investors can also visit the Central Bank or its branches to determine if their applications were successful and how much they owe the Central bank for the treasury bonds.

5.Do the payment.
Investors are supposed to submit their payments in the amount specified by the Central bank.
Use cash or cheques for amounts under Ksh.1 million.
NOTE:if you apply successfully for investing in treasury bonds but you fail to submit payments within the specified time, you may loose your chance of investing in government securities in future.

6.Returns journey begins.
Finally,the investor will now be receiving interests after every six months in their bank account.
Then after the investment maturity, the investor gets the last interest amount and the face value of the bond.

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