Central Bank Invites Bids for KSh 75 Bn Infrastructure Bond

The fast-paced development of major industrial corridors (see map below) in recent years has played a significant role in transforming the warehousing and logistics sector which has long been held back by poor infrastructure. 

Ongoing construction of The Nairobi Expressway under construction.

The Central Bank of Kenya (CBK) has invited bids for a 21-year amortized infrastructure bond worth KSh 75 Billion in September 2021.

Proceeds will be used to fund infrastructure projects in the 2021/2022 National Budget Estimates.

This infrastructure bond will be sold between 20th August 2021 and 7th September 2021, with a payment date of 13th September 2021. It will be tax-free as provided for under the tax laws.

The redemption structure is 1st September 2031-50 per cent of unencumbered outstanding principal amount and 18th August 2042 for 100 per cent – Final redemption of all outstanding amounts.

Bids must be submitted to CBK by 2.00 p.m on Tuesday, 7th September 2021. The Auction Date is Wednesday, 08/09/2021, with results to be announced the following day. 

The CBK will rediscount the bond at 3 per cent above the prevailing market yield or coupon rate, whichever is higher, upon written confirmation to do so from the NSE.

The infrastructure bond will be listed on the Nairobi Securities Exchange with its secondary trading in multiples of KSh 50,000.00 to commence on Tuesday, 14th September 2021.

This is the third time CBK is inviting bids for an infrastructure Bond Offering this year, following the issues in January (16-year) and April (18-year).

“While this may not be a mainstream bond, the auction dynamics will give indications on both the government appetite as well as market’s interest rate expectations,” Stephanie Kimani, NCBA Analyst notes.

“This week may see some meaningful price discovery on the paper through related bonds, although we do not anticipate a marked deviation from the current yields. No doubt, this may also provide some indication of the external appetite for the sovereign even as taper expectations firm.”

Kenya Economy Likely to Grow 6.6% in Fiscal Year 2022/23