StanChart Opens Borrowing Against DhowCSD Bonds

Read Time:2 Minute, 16 Second

Standard Chartered Bank Kenya has rolled out a facility that allows investors to access cash by borrowing against DhowCSD Bonds, creating a way for bondholders to unlock liquidity without selling their securities.

The move targets investors using the Central Bank of Kenya’s DhowCSD platform, which records and manages government securities holdings digitally.

The facility is open to resident investors who purchase Treasury bonds through DhowCSD. It is geared toward retail and affluent clients with established bond portfolios, with access offered through StanChart’s relationship managers and its Priority Client Centre.

The pilot phase earlier in 2025 produced steady uptake, leading to a wider launch and improved integration with DhowCSD accounts. Fixed-rate Treasury bonds with bi-annual coupon payments qualify as collateral.

The DhowCSD platform, launched and went live in 2023, has widened participation in government securities through online onboarding, custody, and trading.

Retail involvement has grown from about 7% of outstanding holdings in June 2023 to 13% by June 2024, while active accounts rose 112% to more than 96,000 over the same period.

Loan Limits and Pricing

StanChart’s facility begins at KES 50,000, with maximum borrowing capped at up to 50% of the value of the bond portfolio.

It operates as an overdraft, meaning users can withdraw funds as needed and pay interest only on amounts drawn.

Indicative pricing sits around 14% per year for Kenya-shilling borrowing, while the bank’s general wealth overdraft rate stands at 15.50% and may shift with market rates. There are no arrangement fees.

Loan-to-value (LTV) ratios are monitored using CBK’s real-time pricing feed. If bond prices fall due to interest-rate changes, clients may need to top up collateral or settle part of the balance to keep the LTV within limits.

Repayment is on demand, with room to match cash flows to coupon payments or other income sources.

How It Works

Investors pledge their bonds as collateral but continue to hold them in their DhowCSD accounts. They retain coupon income, currently ranging between about 10% and 16% on Kenyan government bonds, and keep the option to trade or hold securities in line with their plans.

Funds may be used for investment in other assets such as equities or property, or to cover personal expenses including education or emergency costs. The structure supports a “borrow-to-hold” approach, allowing investors to preserve coupon flows and avoid triggering capital gains events that come with selling securities.

The offering enters a market where interest in government securities has grown due to increased digital access through the DhowCSD platform.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.