The Central Bank of Kenya (CBK) has initiated the sale of a 25-year amortising tax-free bond, aiming to raise up to Sh50 billion for infrastructure development. The bond carries a 12.2% coupon rate and was available for purchase starting Friday, with the auction concluding on March 19, as outlined in the CBK's prospectus.
Redemption terms stipulate that half the principal will be repaid in March 2034, with full settlement scheduled for February 2044. Investors can subscribe between Sh100,000 and Sh20 million, according to the issuance details.
The proceeds will target transport, water, and energy sector projects, aligning with previous infrastructure financing efforts. This follows a recent trend of strong demand for short-term debt instruments, exemplified by a February 20 auction where five-year and 10-year Treasury bonds attracted Sh78.3 billion in bids against a Sh50 billion target, achieving 156.5% oversubscription.
Government domestic borrowing in the first half of the fiscal year reached Sh58.85 billion, below the pro-rated target of Sh139.5 billion. Analysts attribute delays to long-tenor bond issues and significant Treasury bill redemptions between July and December, prompting recommendations to balance short- and long-term debt strategies.
A similar 20-year infrastructure bond issued in November 2018 also aimed to finance transport, water, and energy projects, highlighting ongoing efforts to mobilize capital for national development.
