Open CDS account from Central Bank agent
Posted Wednesday, January 2 2013 at 20:00
Let me commend you for your good response on Treasury bills and bonds that I read online recently. I am a Kenyan working and staying in the United Arab Emirates, Qatar. How can I invest in Treasury bills and bonds in Kenya while away from home? Which organisation do I get in touch with to help me do this? Thank you. — Ben Omari
Thank you for your kind words, it’s good to know that our column has been of help to you. Investing back home while abroad can be quite challenging given the various procedures required.
It is important to appreciate that Treasury bills and Treasury bonds are debt instruments that are issued and sold by the government through the Central Bank of Kenya (CBK).
They carry very little risk since the government is highly unlikely to default in paying the interest on a regular basis, or the principal upon maturity, which makes them secure compared to other investments.
You can invest in Treasury bills and bonds directly or indirectly. The direct method involves opening a CDS (central depository system) account at the CBK and thereafter placing purchase orders directly when the auctions are held.
You can get more information about this from the Central Bank’s website. The indirect method involves using registered agents of the CBK who include stock brokers, investments banks, commercial banks, among others.
Treasury bonds are listed at the Nairobi Securities Exchange (NSE) which means you can sell part or the entire bond before maturity, if the need arises; it also means that their value goes up or down based on market trends.
Treasury bills are short-term with maturities of 91-days, 182-days and 364-days and are not listed at the NSE.
All you have to do is visit any of the registered agents of the CBK and open a CDS account and you will be ready to start trading.
A CDS account is a digital account where your information of ownership of the bond is stored electronically. You may need to enlist the help of a professional to guide you through this process especially since you are outside Kenya.
Alternatively, if you are interested in investing in Treasury bills or bonds without being actively involved, you could invest in unit trust funds that are dedicated to investing in the Treasury bills and bonds and let professionals manage your funds.
There are several companies that do this and you can find out more about them from the financial pages of leading daily newspapers.
Ben Gitau, Research analyst Zimele Research. Write to: firstname.lastname@example.org