What is T-Bills?
Treasury bills are a secure, short-term investment, offering you returns after a relatively short commitment of funds.
How does it work?
When you lend the government money in the form of T-Bills, you will receive your money back plus interest accrued over the specified tenor. For example in Kenya T-Bill tenors are classified into 91 day, 182, and 364 days.
How do I make money from T-bills?
Treasury bills are sold at a discount. This means that investors choose the amount that they will receive when the bill matures, or the face value of the bill, and pay less than that amount when purchasing it.
What are the different types of T-Bills?
There are two kinds of treasury bills
Competitive bidders-investors quote a price or interest rate. Investors must indicate the desired price/yield and usually monitor and understand the movements in interest rates and market conditions. However, such bids may either be accepted or rejected depending on interest rates and liquidity levels. There is no maximum amount per bid per investor for competitive bidders.
Non-competitive bidders-Investors in this category are price takers and depend on the market outcome. Placement in this type of T-Bills is always guaranteed. However, maximum amount one can invest per CDS account per issue/tenor is 20,000,000.
How much money do i need to get started?
To start investing in T-Bills you will need KES 100,000. Subsequent bids will be done in multiples on KES 50,000.
How do i Invest in T-Bills on Abacus.
On the Web platform, click on Bills/Bonds, and on the overview page you will find the rates for the 3 categories of T-Bills. You can proceed to purchase your T-Bill on this page. Your order should be put by wednesday 12:00PM for it to be considered part of the weeks auction, this is because auctions are done on thursday. On friday auction are sent to you stipulatig how much will be deducted from your account.
How do i get my maturity proceeds?
At the end of the 91-, 182- or 364-day period, the face value amount of the bill will be remitted into your Abacus trading account. An Investor may choose to rollover their securities into a new forthcoming issue and in this case, they have to complete application form giving rollover instructions and send them to Abacus before the closure of the period of sale for that bill.
