Procedure of buying Bonds in Kenya. This is The Only Way To Accumulate Wealth

Investing in bonds is the surest way of accumulating wealth,iff you are interested in leaving poverty forever. The procedure of buying bonds in Kenya is as simple as buying shares but the only difference is that bonds require slightly higher minimum investment capital than shares.

In Kenya, the ideal amount of money required to buy bonds is Ksh50, 000,but if you have more, you can confidently invest in the securities.

Below we describe the procedure of buying bonds in Kenya:

Bond A legal contract executed under seal whereby the person or persons entering into it bind themselves to pay a specified amount of money, known as penalty of the bond, if any of the conditions of the contract are not performed.

Principal The person who undertakes to fulfill the conditions of the bond and pay the penalty of the bond if any of the conditions of the bond are not fulfilled.
Note: The term ‘principal’ will be taken to mean ‘the principal or his authorized agent.

Surety The person who undertakes to pay the penalty of the bond if the principal fails not only to fulfill the conditions but also to pay the penalty of the bond.

PROCEDURE FOR BOND EXECUTION

1. The Principal shall fill the relevant form depending on the type of bond he/she wants to execute, and comply with insurance or bank requirements.
2. The principal shall lodge the bond with Bonds section of Customs Services Department.
3. The bond shall then be referred to a proper officer for witnessing of the signing and sealing of the bond by the principal and surety.
4. After witnessing, the bond is referred to a senior officer for confirmation and approval.
5. After approval the bond is numbered and booked in the register.
6. The original bond copy is filed at the station of execution, the duplicate is filed at the station of utilization, the triplicate is given to the principal and the quadruplicate is the guarantors copy.
7. Details of the original or duplicate copies are then captured into the Simba 2005 system and the bond is ready for execution.

PROCEDURE FOR RETIREMENT OF BOND

1. Application for withdrawal of bond is made by the principal to the Commissioner in the appropriate form.
2. The bond is cancelled if there are no outstanding transactions against it.

PROCEDURE FOR BOND-IN-FORCE (B-I-F) CANCELLATION

1. The principal makes application on Form C36 and lodges it together with all relevant documents with the Bonds officer.
2. The application is processed, approved if found compliant, or rejected if found incorrect in any way.
3. The transaction Bond-In-Force is then replenished to the bond account in the Simba system and the application endorsed by the customs officer.

A copy of the form C63 duly numbered and endorsed by the officer is then given back to the applicant as evidence of B-I-F cancellation.

The easiest way to apply for a bond is by approaching an investment bank, where you present a copy of your ID/passport and other required documents. Open a CDS account with the bank. Then fill a form which is presented by the bank including the amount of money you want to invest into the bond.

STEP-BY-STEP GUIDE IN OPENING A CBK-CDS ACCOUNT FOR

KENYANS IN DIASPORA

1. Visit the Central Bank of Kenya website http://www.centralbank.go.ke/ and download mandate card. (Individual) for individual investors and Mandate card (Corporate) for corporate investors

2. Print the appropriate mandate card and fill out your details.
3. Attach a recently taken coloured passport size photograph and a copy of investor’s Kenyan National Identity Card (ID) or Passport. These documents MUST be certified by your bankers (A local commercial bank based in Kenya).
4. Have the filled in CDS mandate card certified by your Commercial bank.
5. The investors Commercial bank will certify the completed CDS mandate card by way of appending the bank’s stamp and signatures of two of their authorised signatories on the space provided

6. Scan the completed CDS mandate card and email to [email protected]
7. Send the physical mandate and attachments by post to:

The Director,

Financial Markets Department

P.O. Box 60000-

00200, Nairobi,

Kenya

8. Once the CDS account has been opened, the investor will be notified of the CDS account number via email as provided on the CDS mandate card submitted to CBK. A formal letter of notification will follow thereafter.

GUIDLINES FOR SUBMISSION OF BIDS (APPLICATION) FOR THE BOND

1. Once the investor has been allocated and notified of their CDS account number, they can then proceed to apply for the Treasury bond that is on offer.

2. To apply for the bond, download the bond application form at http://www.centralbank.go.ke/downloads/securities/appforms/securities/tbonds/tbonds_app form.pdf
3. Fill in the following key details:
   • Issue Number

• Duration

• Value date
• Total Face Value – Amount the investor is willing to invest in Kenya Shillings
• (Minimum Kes 100,000 and additional in Multiples of Kes. 50,000 with a maximum of Kes 20 million per CDS account per investor for)
• Interest Rate (rice)

Treasury bonds are a secure, medium- to long-term investment that typically offer you interest payments every six months throughout the bond’s maturity. The Central Bank auctions Treasury bonds on a monthly basis, but offers a variety of bonds throughout the year, so prospective investors should regularly check for upcoming auctions.

Most Treasury bonds in Kenya are fixed rate, meaning that the interest rate determined at auction is locked in for the entire life of the bond. This makes Treasury bonds a predictable, long-term source of income. The National Treasury also occasionally issues tax-exempt infrastructure bonds, a very attractive investment.

Individuals and corporate bodies can invest in Treasury bonds as a nominee of a commercial bank or investment bank in Kenya, but if you hold a bank account with a local commercial bank you can also invest directly through the Central Bank and avoid additional fees.