The National Treasury intends to amend the Central Bank of Kenya(CBK) Act to facilitate the establishment of a Central Securities Depository System that will allow the monetary authority to engage in secondary trading of government bonds.
Currently, Government Bonds are listed on the Nairobi Securities Exchange(NSE). Only investors with active CDS Accounts with the Central Bank of Kenya are eligible to participate in the auctions.
Secondary trading of Treasury Bonds takes place at the NSE in multiples of KSh 50,000.00
While presenting the 2022/23 government revenue and expenditure plan, Treasury Cabinet Secretary Ukur Yatani said this plan is part of the ongoing legal and regulatory framework review to deepen and address emerging issues in the capital markets space.
Treasury bonds offer investors interest payments after every 182 days, with CBK undertaking monthly auctions and offering a variety of bonds to investors throughout the year.
Most Treasury bonds in Kenya are fixed coupons with the rate of return determined at the auction and is locked throughout the bond’s life.
These instruments are thus a determined source of income for long term investors and are attractive, especially the infrastructure bond that is usually tax-exempt.
Figures from the NSE Monthly Barometer indicate that turnover in the secondary bonds market increased by 54.3%, from KSh 54.9 Billion to KSh 84.7 Billion.