Plain English

A loan you make to the government. You hand over money now, they pay you interest along the way, and they give your money back on an agreed date.

You are the lender here, not the borrower. Everything else follows from that.

Precisely: A tradeable debt security issued by the National Treasury through the Central Bank of Kenya, carrying a fixed or indexed coupon and a stated maturity.

The interest the government pays you, usually twice a year. A 13% coupon on Ksh 100,000 pays Ksh 13,000 a year — Ksh 6,500 every six months.

The coupon is fixed for the life of the bond. It never changes, whatever happens to rates later.

Precisely: The annual interest rate stated on the bond, paid in instalments at the coupon frequency (twice yearly for most Kenyan issues).

The amount the government promises to give back at the end. Prices are quoted per Ksh 100 of face value, so a price of 98 means you pay 98 to be repaid 100 later.

This is why a bond bought below 100 earns you more than its coupon suggests.

The date the government repays your money in full and the bond ends.

Your money is committed until then — unless you sell to someone else first.

How long the loan runs. A 10-year bond has a 10-year tenor. Kenya issues everything from 91 days to 30 years.

Longer usually pays more, because you are waiting longer and taking more risk.

Your actual annual return if you hold the bond to the end — counting the interest you receive AND any gain or loss from the price you paid.

The coupon tells you what the bond pays. The yield tells you what YOU earn. They are only the same if you paid exactly 100.

Precisely: The discount rate that makes the present value of all remaining cash flows equal to the price paid, including accrued interest.

Your yield after withholding tax has been taken off. This is the number that actually reaches your bank account.

Almost everywhere else quotes gross yield. A 15% gross yield on a short bond is 12.75% in your hand.

Tax deducted from your interest before you receive it. In Kenya: 10% on bonds of 10 years or longer, 15% on shorter ones, and 0% on infrastructure bonds.

Tenor changes your tax rate, so a longer bond can beat a shorter one twice over.

Precisely: A final tax on interest income under the Income Tax Act, deducted at source by the paying agent. Applied to coupon interest only — the return of your principal is not taxed.

A government bond that funds infrastructure projects and pays interest completely free of withholding tax.

A 12% tax-free IFB beats a 13.5% taxable bond. Comparing headline rates alone gets this backwards.

A picture of what the government pays for loans of different lengths — 2 years, 5 years, 10, 20 — drawn as a line from short to long.

When the line slopes up, longer loans pay more and you are rewarded for waiting. When it is flat, a 20-year bond pays little more than a 5-year one — so why lock your money away? The shape is the market telling you where the value is.

Precisely: The relationship between yield to maturity and time to maturity across a set of comparable securities.

The interest rate the Central Bank sets to steer the whole economy. Every other rate in Kenya — bonds, bank loans, savings — is priced with one eye on it.

When the CBR falls, new bonds tend to pay less. That is why the direction it is moving matters as much as the level.

The clean price is the quoted price. The dirty price is what you actually pay — clean price plus the interest that has built up since the last coupon date.

You are compensating the seller for interest they earned but have not yet been paid. Budget for it: it is real money on settlement day.

Interest that has quietly built up day by day since the last coupon payment, but has not been paid out yet.

Precisely: Calculated on an Actual/364 day-count basis. Kenyan government securities run on a 364-day year — bills are sold for 91, 182 and 364 days, and a bond pays every 182 days — so half a coupon period accrues exactly half a coupon.

How Treasury bills are quoted. You buy below Ksh 100 and are repaid Ksh 100 — the gap is your interest. A "9% discount rate" is not a 9% return.

Your true annual return is a little higher than the quote, because you can roll a short bill several times a year and compound it. The gap therefore SHRINKS as the tenor lengthens — about 29 basis points on a 91-day bill, almost nothing on a 364-day one, which you only hold once. Our T-bills page does the conversion.

A short government loan of 91, 182 or 364 days. No coupons — you simply pay less than Ksh 100 today and receive Ksh 100 at the end.

The natural home for money you will need soon but do not want sitting idle.

Spreading your money across bonds that mature in different years, so something matures regularly instead of everything at once.

You are never forced to sell at a bad moment, and you keep reinvesting at whatever rates arrive.

How new bonds are first sold. CBK announces an offer, investors bid, and the accepted bids set the rate. You can bid from Ksh 50,000.

The rate an auction actually settled at — the weighted average of the bids CBK accepted. It is what buyers really got, as opposed to what anyone asked for.

Recent clearing rates are the best public evidence of what the market pays today, and they are what our bid guidance and market figures are built from.

Bids received divided by the amount offered, for a whole auction. 2.0x means investors offered twice the money the government asked for. CBK calls this the performance rate and prints it as a percentage; we show it as a multiple.

Heavy demand lets CBK reject expensive bids, so bidding a low rate is riskier when cover is high.

Selling more of a bond that already exists instead of creating a new one. The bond keeps its original name — so a "15-year" bond re-opened years later may have only five years left to run.

The tenor in the issue code is not the time left. Comparing rates by the label alone compares different things.

Where bonds are bought and sold between investors after issue, on the Nairobi Securities Exchange. This is how you exit before maturity.

Prices here move with rates, so selling early can gain or lose you money. Holding to maturity avoids the question entirely.

The Central Bank's online system where you open a securities account, place bids and hold your bonds. It replaced the old CDS branch process.

What your money earns after prices have risen — the growth in what it can actually buy, rather than in how many shillings there are.

A high rate in a high-inflation year can leave you standing still. This is the number that decides whether you are genuinely getting ahead, and the calculator shows it for every bond.

Precisely: Divide, do not subtract: (1 + your return) / (1 + inflation) - 1. At Kenyan rates the difference is not academic. Take a 12% net yield against 6% inflation: that is 5.66% real, where subtracting gives 6.00% — a 34 basis point overstatement, and it grows as both rates rise. (Round numbers, chosen to make the arithmetic legible; the calculator uses the current rate.)

A figure counted in shillings, without asking what those shillings will buy. Almost every rate you will ever be quoted is nominal.

Nominal and real are not two views of the same number — they answer different questions. "Will my balance be bigger?" is nominal. "Will I be better off?" is real, and it is the one you meant.

What a fixed amount of money can actually buy. Inflation erodes it even when the amount never changes.

The longer the bond, the more of the real loss sits in the principal rather than the coupon. It is invisible in a yield and decisive over a long holding.

Precisely: This is where a bond quietly loses money that no yield figure shows. The face value comes back exactly as promised — but at 6% inflation, Ksh 100 repaid in fifteen years buys what about Ksh 42 buys today.

The inflation rate at which your investment exactly stands still — you end up with more shillings and the same purchasing power.

Precisely: Arithmetically it is just your net yield restated. The value is in the restatement: "inflation would have to average above 11.56% for the rest of the term before I lost ground" is a question you can form a view on. "My net yield is 11.56%" is not.

The median rate that similar bonds have actually cleared at in recent CBK auctions — similar meaning the same tax treatment and roughly the same time left to run.

It is the only honest way to judge a quote you have been given. Comparison requires matching four things — gross against gross, tax status, remaining term rather than the tenor label, and recency — and getting any of them wrong produces a confident wrong answer.

Precisely: Kenya has no published secondary-market benchmark a retail buyer can check a broker quote against, and this app holds no exchange prices at all. What it does hold is every auction CBK has settled, which is a defensible answer to "is this price generous or poor?".