Government Securities include treasury bills (short term instruments) and government bonds (long term instruments).
Treasury Bills (in short T-Bills) are short-term promissory notes issued by national governments as an instrument to regulate money supply and raise funds from the markets.
They are often issued through central banks or reserve banks and mature within a year. T-Bills are sold at a discount, their yield being the difference between the purchase price and the par-value (face value).
In Kenya, if one successfully bids for 364-day treasury bills worth KES 1,000,000 on maturity after 1 year at a rate of 11% per annum. He/she will pay KES 890,000 immediately the Central Bank of Kenya informs him/her that his bid has been accepted then wait to receive KES 1,000,000 in his or her bank account (assuming he/she is exempted from withholding tax – currently 15%) at the end of the 364 days (1 year) thereby gaining KES 110,000.
Besides 364 day T-Bills, there are also others for 91-days (3 months) and 182 days (six months) in the Kenyan case.
A bond is debt instrument under which the issuer (borrower) owes the holders (lenders or investors) a debt. The borrower is obligated to pay investors an interest and repay the principle sum at a later date.
The diagram below presents a summary of the Kenyan Government securities as published by the Central Bank of Kenya:
Source: https://www.centralbank.go.ke/project/government-securities/