How Treasury bonds pay you
A Treasury bond is a loan to the Government of Kenya. It pays interest, called the coupon, every six months, then returns your money on the maturity date.
Withholding tax on coupons
| Treasury bond, original term under 10 years | 15% |
| Treasury bond, original term 10 years or more | 10% |
| Infrastructure bond (IFB) | 0% |
The tax is taken before the coupon reaches you, so there is nothing more to pay.
Worked example: KSh 100,000 in FXD1/2019/020
| Yearly coupon (12.873%) | KSh 12,873 |
| Each six-monthly coupon | KSh 6,436.50 |
| Less 10% withholding tax | KSh 643.65 |
| You receive every six months | KSh 5,792.85 |
Frequently asked questions
What is a clean price? The price without interest earned since the last coupon. If you buy between coupon dates you also pay that accrued interest, and you get it back in your first coupon. This calculator uses the clean price.
How do I buy one? Open a DhowCSD account with the Central Bank of Kenya, then bid in an auction when a bond is offered. You can also buy an existing bond through a stockbroker at the Nairobi Securities Exchange.
What if I need the money early? You can sell a bond at the NSE before maturity, but the price may be higher or lower than you paid. For money you may need soon, T-bills or a money market fund are more flexible.
For education only, not financial advice. Check the coupon, dates and tax in the CBK prospectus. The final coupon may differ slightly if the maturity date falls between regular coupon dates.