The main difference between Treasury Bills (T-Bills) and Treasury Bonds (T-Bonds) in Kenya is their maturity period and interest payment structure.
1. Treasury Bills (T-Bills)
✅ Short-term investment (matures within 1 year)
✅ Available maturities: 91 days, 182 days, and 364 days
✅ Minimum investment: KES 100,000 (subsequent investments in multiples of KES 50,000)
✅ Sold at a discount and redeemed at face value (no periodic interest payments)
✅ Interest is determined by the difference between the purchase price and the redemption amount
✅ Taxable interest (subject to withholding tax at 15%)
📌 Example:
- If you invest KES 92,292.20 in a 364-day T-Bill with a 10% yield,
- Upon maturity, you receive KES 100,000, making a profit of KES 7,707.80.
📌 Auctioned weekly by the Central Bank of Kenya (CBK).
2. Treasury Bonds (T-Bonds)
✅ Medium-to-long-term investment (matures in over 1 year)
✅ Minimum investment: KES 50,000
✅ Pays fixed interest (coupons) every 6 months until maturity
✅ Principal repaid at maturity
✅ Some bonds (Infrastructure Bonds) are tax-exempt
📌 Types of Treasury Bonds in Kenya:
1️⃣ Fixed Coupon Bonds – Pays a predetermined interest (coupon) every six months
2️⃣ Infrastructure Bonds (IFBs) – Used for infrastructure projects, tax-exempt
3️⃣ Floating Rate Bonds – Interest varies based on market conditions (e.g., 91-day T-Bill rate + margin)
4️⃣ Zero Coupon Bonds – Issued at a discount, pays no interest until maturity
📌 Auctioned monthly by CBK but available throughout the year.
Key Differences Between Treasury Bills and Treasury Bonds in Kenya
| Feature | Treasury Bills (T-Bills) | Treasury Bonds (T-Bonds) |
|---|---|---|
| Investment Term | Short-term (≤ 1 year) | Medium-to-long-term (> 1 year) |
| Maturity Periods | 91, 182, 364 days | 1 to 30 years |
| Minimum Investment | KES 100,000 | KES 50,000 |
| Interest Payments | No periodic payments (bought at a discount, redeemed at full value) | Pays interest every 6 months until maturity |
| Risk Level | Low | Low |
| Taxation | 15% withholding tax on gains | Infrastructure Bonds are tax-exempt |
| Liquidity | High (short-term nature) | Lower than T-Bills (longer lock-in period) |
| Issued By | CBK (on behalf of the government) | CBK (on behalf of the government) |
| Auction Frequency | Weekly | Monthly |
Which One is Better?
✅ Choose Treasury Bills if you want a short-term, secure investment with guaranteed returns.
✅ Choose Treasury Bonds if you prefer steady, long-term income from semi-annual interest payments.
Both T-Bills and T-Bonds are risk-free investments backed by the Government of Kenya.
