This archive report was first published on 31 August 2021.
The Central Bank of Kenya (CBK) has announced plans to issue a Sh75 billion infrastructure bond, which will be used to fund projects in the current financial year ending June 2022.
The bond, which will be traded in the secondary market, is expected to attract a lot of liquidity due to its tax-free nature.
Analysts predict that the bond will be a major draw for investors, with Churchill Ogutu, head of research at Genghis Capital, stating that the market is 'liquid in the initial sale period' and that it 'should anchor subscription of the infrastructure bond.'
The 21-year amortised bond is the longest infrastructure bond to be issued in two years, and its principal (face value) will be paid down regularly along with its interest expense over the life of the bond.
However, the issuance of the bond has raised concerns that it may crowd out the private sector from the credit market, with the latest credit survey showing that banks will warehouse much of their deposits in government securities.
Gerald Muriuki, Research Analyst at Genghis Investment, Churchill Ogutu, Senior Research Analyst and Patrick Mumu, Research Analyst when they released a report predicting that the Nairobi Securities Exchange will offer investment opportunities for the year 2020.
