NAIROBI, Kenya, Feb 20 – The first ever infrastructure bond to be issued by the government has been oversubscribed by 45 percent despite the slowing economy.
Finance Minister Uhuru Kenyatta said on Friday that the local bond attracted bids worth Sh26.9 billion against the targeted Sh18.5 billion.
“The response by our investors is indeed encouraging and equally satisfying is that it is at an average of 13.5 percent. The interest rate is within the range of similar bond products trading in the market,” Mr Kenyatta said.
The bond issue attracted 1,560 bids; 142 for Sh100,000, 451 for Sh1 billion, 452 for between Sh1 and 5 billion and 903 bids from the smaller investors.
“Such impressive results encourage us to want to float more bonds, which will be the case,” the Finance Minister said.
CBK governor Prof Ndungu Wainaina explained that the bids would be honoured in accordance with the application.
“We will pick the offers according to the bids, highly considering the interest rate quoted,” Professor Ndungu explained.
Mr Kenyatta reiterated that the importance of capital markets in the mobilisation of resources cannot be overemphasised and thus the reason the government is taking all necessary measures to ensure good governance is entrenched in the capital markets.
Speaking at the same function, Nairobi Metropolitan Minister Mutula Kilonzo emphasised the need to rid the government of corruption to restore public confidence.
“The enthusiastic take up of this bond is enough proof that Kenyans have money and they are willing to invest it,” Mr Kilonzo said.
The Minister said that funds raised from the bond would be spent on the construction of water supplies, sewerage systems, dams and irrigations projects.
He said part of the funds would be spent on the construction of several roads, the drilling of electricity generation steam wells, new transmission lines to the national grid and rural electrification.
The bond carries a 12.5 percent coupon rate and was to be redeemed in three stages; first after six years, then after two and four year periods.