A KSh 100,000 Treasury bond with a 14.00% coupon pays KSh 6,300 every six months after tax.
How Kenyan Treasury bonds pay
A Treasury bond pays interest, called the coupon, twice a year until it matures, and then returns the face value. Withholding tax is deducted from each coupon: 15% for bonds with a tenor under 10 years and 10% for bonds of 10 years or more. Infrastructure bonds (IFBs) are tax-free, which is why they are popular with retail investors.
If you buy a bond on the secondary market, you may pay more or less than face value. Paying below 100% adds a gain at maturity; paying above 100% reduces your return.
Rates used in this calculator
Withholding tax on investment interest
Money market funds
15% WHT on interest
Treasury bills
15% WHT on the discount
Treasury bonds under 10 years
15% WHT
Treasury bonds of 10+ years
10% WHT
Infrastructure bonds
Tax-free
Bank fixed deposits
15% WHT
Frequently asked questions
Are Treasury bonds taxed in Kenya?
Yes, through withholding tax on coupons: 15% for bonds under 10 years and 10% for bonds of 10 years or longer. Infrastructure bonds are exempt.
What is the minimum to invest in a Treasury bond?
The minimum face value is KSh 50,000 through the CBK DhowCSD platform.
How often do bonds pay interest?
Every six months, on the dates set in the bond prospectus.