The Central Bank of Kenya (CBK) has announced a bond sale worth Ksh 70 billion, inviting both individual and institutional investors to participate.
The sale, which runs from January 23, 2025, to February 12, 2025, offers an opportunity to invest in government bonds with a minimum investment requirement of Ksh 50,000.
These bonds, which are tax-free, will fund critical infrastructure projects for the 2024/2025 fiscal year.
CBK has made two bond options available to cater to both medium-term and long-term investors. The 11.8-year bond (IFB1/2022/14) offers an attractive coupon rate of 13.9380 percent, making it a great option for those seeking medium-term returns.
On the other hand, long-term investors can consider the 15.1-year bond (IFB1/2023/17), which offers a slightly higher coupon rate of 14.3990 percent.
The CBK is accepting both competitive and non-competitive bids for the bonds. Non-competitive bidders can invest up to Ksh 50 million per Central Securities Depository (CSD) account per tenor. However, State corporations, public universities, and Semi-Autonomous Government Agencies are exempt from this limit. For competitive bids, the minimum investment is Ksh 2 million per CSD account per tenor.
Bond Auction
The auction for the bonds will take place on February 12, 2025. Successful investors will be able to retrieve their payment details from the DhowCSD Investor Portal or App by February 14, 2025.
CBK has warned that investors who fail to meet payment deadlines may face suspension from future participation in government securities. For those who require liquidity, CBK offers a rediscounting option at 3% above the prevailing market yield or the coupon rate, whichever is higher. Investors can request rediscounting by sending written instructions to [email protected].
These bonds also meet the statutory liquidity ratio requirements for Commercial Banks and Non-Bank Financial Institutions under the Banking Act CAP 488 of the Laws of Kenya. Furthermore, they will be listed on the Nairobi Securities Exchange as non-benchmark bonds, providing additional trading opportunities.
To participate in the bond sale, investors must have an active CSD account. CBK also mentioned that the bonds could be reopened for future bidding, providing further investment opportunities.
Secondary trading for the bonds will begin on February 17, 2025, with transactions in multiples of Ksh 50,000. CBK has emphasized its discretion in accepting bids, stating that it reserves the right to accept bids in full, in part, or reject them entirely without offering an explanation.
Investors are encouraged to ensure their CSD accounts are active and to adhere to all terms to fully benefit from this tax-free bond sale while supporting Kenya’s infrastructure development.
