Sh30Bn infrastucture bond oversubscribed as t-bill appetite wanes

October 21, 2016
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The infrastructure bond will fund projects in the following sectors: Roads- Sh10Bn, Energy Sh10Bn and Water 20Bn /FILE
The infrastructure bond will fund projects in the following sectors: Roads- Sh10Bn, Energy Sh10Bn and Water 20Bn /FILE

, NAIROBI, Kenya, 21 Oct – The government’s first ever 15-year infrastructure bond has been oversubscribed by 16 per cent as investors are keen on higher yields.

The Central Bank of Kenya (CBK) was seeking Sh30.5 billion to finance road, energy and water projects.

CBK accepted bids worth Sh30.5 billion out of the Sh35 billion offered by investors at a rate of 13.177 per cent.

However, local and international investors appetite for the infrastructure bond may have led to the under subscription on the 364 -day T-bills.

The 364 – day T – Bills of Sh6 billion was undersubscribed by 22 per cent with yields of 10 per cent.

Experts predict that treasury Bills and Bonds will continue to gain traction as they seem attractive especially for banks.

According to Commercial Bank of Africa (CBA) Treasury Department, banks will now focus on selling their money to the government as it’s safer to lend to the government.

“Banks are in business, they will have to do what makes sense to them, since the cap will limit who they lend to it is highly likely they will focus on lending to the government,” the department told Capital FM Business.

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