Treasury Bills

Treasury bills are a secure, short-term investment, offering you returns after a relatively short commitment of funds. Treasury bill rates in Kenya are attractive, providing an excellent investment opportunity that is readily available, as they are auctioned each week.

Treasury bills are sold at a discount. This means that investors choose the amount that they will receive when the bill matures, or the face value of the bill, and pay less than that amount when purchasing it.

Through the Dhow CSD portal and mobile application, Individuals and Corporate bodies can invest in Treasury bills without going through an intermediary by accessing https://dhowcsd.centralbank.go.ke/ and registering for CSD accounts. Investors inter alia individuals and corporates can equally invest via their respective Kenyan commercial banks and investment banks as custodials.

Follow this step-by-step guide to invest in Treasury bills through the Central Bank:

1. Open a CDS Account

The first step to investing in Treasury bills is to open a CDS account with the Central Bank. It is free to open these accounts, which are how the Central Bank keeps track of who holds which government securities. Once you have your CDS account, which can be opened for an individual or a corporate body, you can invest in multiple Treasury bills and bonds, so you only need to complete this step the first time you’re investing.

To open a CDS account, you need to hold a bank account with a Kenyan commercial bank. You can collect a mandate card from the Central Bank or any of its branches, and must fill it out in neat block letters. You’ll need to provide contact information and information about your commercial bank account. You’ll also need to have to have two signatories from your commercial bank sign the card to verify the information you’ve provided.

You can find sample mandate cards HERE.

When submitting your mandate card, you also need to submit a passport-sized photograph of yourself, which has to be certified and stamped by a representative from your commercial bank.

Finally, you’ll also need to submit a clear copy of your National Identity Card, passport or alien certificate.

Requirements for Individuals Opening CDS Accounts

Requirements for Corporate Entities Opening CDS Accounts

2. Decide How You Want to Invest

Treasury bills are offered every week, with maturities of 91 days, 182 days and 364 days. This means that when you are ready to invest, you will be able to choose from one of those options.

You should decide on a maturity length based on the recent interest rates, which can give you an idea of what to expect in upcoming auctions, and based on how long you can commit your funds for.

The minimum face value purchase for Treasury bills and bonds is Kshs. 50,000.00 for non-competitive bids and Kshs. 2,000,000.00 for competitive bids, and must be invested in denominations of Kshs. 50,000.00.

3. Complete and submit bids via the Dhow CSD Mobile app or portal

Creation of bids (Bills or Bonds)

After you log in to the Investor Portal, menu items are displayed on the left side of the screen.

Click on the Auctions menu item and a list of securities available for Auction are displayed.

Once you decide on preferred security, click on create bid tab against the selected security and a Place New Bid template will pop-up.

On the left top side of the bid form, you can opt to either place a Competitive or Non-Competitive Type of bid.

Fill in face value in “Amount” field.

Fill in desired rate in “Yield” field (applicable only to Competitive option)

The “Bid broker” field is defaulted to None (however, you may select a broker from options provided when submitting a bid for Bond securities only)

“Source of funds” field select either Local or Offshore

“Specific source of funds” field selects either Maturing T-Bill/T-Bond, Others or Salary. If you opt for “Others” you will be required to provide specific detail in “Additional information” field e.g., farming or Retail Business

Accept “Legal” and “Fund” terms by checking the boxes.

Click on Place Bid tab at the bottom right side and details of bid will be displayed for you to confirm before completing the process.

Once confirmed, place the bid and you will receive a pop-up message indicating that your bid has been submitted successfully. An investor will equally receive an email notification on his registered email address.

Approval of Placed Bids For Corporate and Joint Account Investors Only.

For Corporate and Joint Account investors the initial process of placing a bid is as above, the status of bid will be displayed as “Pending Approval”.

One or two other persons as per the approval mandate set when opening the account will log into the IP and access Bids menu. Click on bid and details will be displayed including Approve and Reject tabs.

Click on Approve tab and details of bid will be displayed for you to confirm and an additional request for OTP number will be sent to either via your email or SMS as selected in notification menu

After input of received OTP number, system will process submission of bid.

Once the bid has been fully approved as per approval mandate status of bid is updated as submitted in Bids menu

Cancellation of Bids

To cancel a submitted bid before Auction cut-off time, click on the Bids menu item and list of submitted bids will be displayed.

Select the relevant bid and details will be displayed with a “Cancel bid” tab.

Click on Cancel bid tab on the top right side and details of bid will be displayed for you to confirm.

The Bids menu displays your bid with status as cancelled.

4. Getting the auction results

The Central Bank’s Auction Management Committee (AMC) meets at 4pm on auction days and, after considering all received bids, determines the cut-off rate and the weighted average of the accepted bids for market-determined coupon rate bonds.

While investors will typically receive Treasury bonds in the amount they applied for, the Central Bank can issue bonds in a lower amount.

5. Payment

Payment for any ISIN should be done by 2pm on a settlement date or, if that settlement date is a public holiday, the following business day will apply.

Successful bidders who fail to submit payments within the payment period for three consecutive times, will be automatically barred from future investment in government securities for a period of six months.

6. Maturity proceeds

Investors who may have maturities on specific settlement dates, have the option of performing a netting action by activating the netting flag which can be found in the investor portal or mobile application under CSD accounts profile. By activating this flag, any corporate (coupon payment or redemption) that coincides with a given bid on a settlement date will be netted off and any refund or top up will be applied.