NAIROBI, Jan. 25 (Xinhua) — Kenya on Thursday put up for sale an infrastructure bond worth 70 billion shillings (about 430 million U.S. dollars) — the largest ever in recent terms — as the government ramps up borrowing from both domestic and external sources.
The Central Bank of Kenya (CBK) said in a notice issued in the capital of Nairobi that the bond would be tax-free and have a shorter tenor of 8.5 years.
The two incentives are meant to entice investors to buy the paper whose funds, the apex bank said, would be used to fund infrastructure projects in the 2023/2024 fiscal year.
The bond’s yield, which is market-determined, is expected to stand at an average of 20 percent, higher than the 18 percent that the Treasury bills are currently attracting.
The central bank said the paper will be sold until Feb. 14, with the secondary trading at the Nairobi Securities Exchange expected to start soon after.
The bond has been floated at a time when the Kenyan government said it is facing a cash crunch that has seen it delay disbursements to various sectors as well as increase external borrowing from multilateral lenders, including the International Monetary Fund, which gave Kenya 938 million dollars loan on Jan. 18.
Kenya’s public debt stands at 64 billion dollars, of which 33.7 billion is domestic, according to the apex bank.
The government is currently paying the highest interest rates ever on domestic borrowing, making local loans much more expensive.
Despite the faster public debt growth, it remains sustainable, according to the World Bank.
