Corporate Bonds Made Simple – Understanding Bonds and the EABL 11.8% Note

If you’ve ever wondered “What are bonds?”, “How do I earn from them?” or “Are they really safe?”, this post explains it in plain language — with real examples you can relate to.

What Is a Bond?

A bond is simply a loan — but this time you are the lender. You lend money to a government or company, they pay you interest for using it, and when the bond period ends, you get your full amount back.

💡 Think of it like lending someone KES 10,000 and agreeing they’ll pay you back with a little extra every few months.

Example:

If a bond pays 11.8% per year, investing KES 10,000 earns KES 1,180 interest annually. However, the interest is paid semi-annually — that means you receive it in two equal parts:

✅ May: KES 590
✅ November: KES 590

So each year you earn a total of KES 1,180 before tax.

In Kenya, bond interest is subject to a 15% withholding tax. This is automatically deducted at the source before you receive your payout. So in this example, your net interest per year after tax will be around KES 1,003, paid as approximately KES 502 every six months.

Why Invest in Bonds

✅ Steady income — you get paid fixed interest on schedule (May & November for EABL bonds).
✅ Lower risk than shares — bond prices are more stable and predictable.
✅ Predictable returns and diversification — you know your exact income and duration.

Bonds are ideal for anyone who wants consistent, low-stress income rather than the ups and downs of stock trading.

Understanding Corporate Bonds

Companies also borrow money to grow — to build factories, refinance loans, or expand operations. Instead of taking bank loans, they can borrow directly from investors like you.

🏢 You lend → Company pays interest → Company repays you later. That’s what a corporate bond is.

Corporate bonds like the EABL 11.8% Medium-Term Note offer investors steady returns for a fixed period — in this case, 5 years — while helping companies fund operations responsibly.

Extra Example for Clarity

If you invest KES 100,000 in the EABL Bond at 11.8%, you’ll earn KES 11,800 per year (KES 5,900 paid in May and KES 5,900 in November) before tax. After 5 years, you’ll have earned KES 59,000 in total interest before tax — and still receive your full KES 100,000 capital back.

That’s what makes bonds such an appealing option — predictable, transparent, and accessible even for small investors.

Corporate Bonds vs Shares

Feature	Shares	Corporate Bonds
Nature	Ownership in a company	Lending to a company
Returns	Dividends (if profits allow)	Fixed interest
Risk	Higher	Moderate
Stability	Volatile	Steady

When you buy shares, you become an owner. When you buy bonds, you’re a lender — and you get paid regardless of short-term market performance.

Corporate vs Treasury Bonds

🏛 Treasury bonds: Issued by government → very safe → lower returns.

🏢 Corporate bonds: Issued by companies → slightly higher risk → better returns.

Corporate Bonds vs Money Market Funds

💸 Money Market Funds (MMFs): 10–12% returns but can change with market rates.

💰 Corporate Bonds: Fixed rate (like EABL’s 11.8%) for the entire term.

If you prefer certainty, corporate bonds provide predictable income every year.

The EABL 11.8% Medium-Term Note (2025–2030)

EABL (East African Breweries Limited) is raising money directly from investors through a corporate bond. You lend EABL your money, and in return they pay 11.8% interest per year, deposited every May and November straight to your bank account.

Why EABL Is Borrowing

💼 To refinance existing loans
⚙️ To support operations
🚫 Not to take on new debt

Key Details

Duration	5 years (2025–2030)
Interest Rate	11.8% per year
Minimum Investment	KES 10,000
Listing	Nairobi Securities Exchange
Offer Closes	10 Nov 2025
First Payment	18 Nov 2025
Listing Date	25 Nov 2025

Payments are automatic — no chasing or paperwork once you’ve applied.

Why It Matters

✅ Regulated by CMA and listed on the NSE
✅ Backed by EABL’s strong reputation
✅ Fixed income for five years

It’s a transparent, credible, and rewarding investment option for Kenyans seeking steady returns.

How to Invest in the EABL Bond

Who Can Invest

✔️ Anyone with a CDS account (via a bank or licensed broker)
💵 Minimum amount: KES 10,000

If you already trade shares or Treasury bills, your current CDS account works perfectly.

How to Apply

Confirm or open your CDS account
Visit eablmtn.e-offer.app
Fill the form and submit online

It’s fast, paperless, and secure.

After You Invest

📧 Receive an email confirmation
💳 Interest paid twice a year
📊 Your bonds appear in your CDS account

You can hold until maturity for full returns or trade earlier on the NSE if you need cash.

Managing Risk and Building Strategy

Is It Safe?

✅ Regulated by CMA & NSE
⚙️ Unsecured but backed by EABL’s financial strength

It’s not government-backed, but it’s relatively safe due to EABL’s strong track record.

Risks to Note

📉 Interest-rate risk — bond prices may fall if market rates rise
💸 Early-exit risk — selling before maturity can lower your profit

Holding until maturity locks in your full 11.8% per year plus your principal.

Tax Treatment

💰 15% withholding tax on interest (deducted automatically)
❌ No capital gains tax when you sell on NSE

Why Bonds Are Great During Elections

🛡️ Provide stable income
📉 Less affected by market volatility

They’re ideal when the stock market feels uncertain — your income keeps flowing regardless of politics or sentiment.

Final Takeaway

🎯 Combine bonds + shares + money market funds for balance. Use bonds for safety, shares for growth, and MMFs for liquidity.

Corporate bonds like EABL’s 11.8% Note offer the perfect mix of security, income, and growth potential — an excellent starting point for every investor in Kenya.