Nairobi — Standard Chartered Bank Kenya has unveiled a new lending facility allowing clients to borrow against their investments in Kenyan government bonds acquired directly through the Central Bank of Kenya's (CBK) Dhow Central Securities Depository (DhowCSD).

The facility will enable resident investors to unlock liquidity from their DhowCSD bond portfolios while still receiving bi-annual coupon payments.

Loans will be offered at competitive interest rates, with no arrangement fees, targeting affluent clients who hold CBK-issued bonds.

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"In line with the government's agenda to digitise and democratise financial solutions and access for all citizens, we saw an opportunity to extend our wealth lending capability to Kenyans who have invested directly with CBK and would require liquidity," said Edith Chumba, Standard Chartered's Head of Wealth and Retail Banking for Kenya and East Africa.

"Our aim is to help investors unlock the value of their Government Bonds purchased via DhowCSD. The facility can be used for reinvestment or personal needs, with a minimum loan amount of Sh50,000 and a maximum determined by the size of the client's bond portfolio."

The bank said the pilot phase conducted earlier this year had been well received, reflecting growing demand for flexible, asset-backed financing solutions.

Unlike traditional loans, the facility is structured as an overdraft, offering more flexible repayment options.

CBK data shows the DhowCSD platform has significantly boosted retail investor participation in the government securities market.

Individual investors now account for 79 percent of all account holders, while the value of holdings by non-institutional investors has nearly doubled, rising from 7 percent in June 2023 to 13 percent in June 2024.

CBK contends that DhowCSD has also broadened access to state securities trading, with active accounts surging by 112 percent from about 45,000 in July 2023 to more than 96,000 by August 2024.