This archive report was first published on 10 October 2019.
On October 10, 2019, the National Treasury floated a Sh60 billion infrastructure bond, the second such issue this year, to finance the national Budget.
The 16-year bond will have a coupon determined by the market through the auction system, and the bond interest will not attract tax – amounting to 10 per cent – normally charged on the other issues.
The bond will be redeemed in phases, with the first one scheduled for October 2030 and the second one set for October 2035, which is also the full maturity date of the issue.
According to Patrick Mumu, a research analyst with Genghis Capital, "We are seeing heavy demand for the bond and it is likely to be oversubscribed." He added, "In fact, there are chances that the subscription will be good enough to enable the CBK raise the money and reject the expensive bids."
The last time an infrastructure bond was floated, it came with a 12.2 per cent coupon. Mr Mumu said the bids so far received range between 11.7 and 12.3 per cent, opening a gap which is likely to be narrowed as the closing date for the issue draws near.
