The Central Bank of Kenya (CBK) has floated an 18-year Infrastructure bond worth KSh 20 billion to fund projects in the 2021/22 budget estimates.
The bond sale runs between 28th June 2022 and 7th July 2022 or upon attainment of the required amount.
According to the CBK, bids will be allocated on a first-come-first-served basis, while the CBK will offer investors a coupon rate of 13.742%.
The bond is an addition to two re-opened 15-year fixed coupon treasury bonds intending to raise KSh 40 billion for budgetary support.
The period of sale of these re-issued treasury bonds is between 28th June 2022 and 19th July 2022. The coupon rate for the re-opened 15-year treasury bond first issued in 2013 at 12.00% per annum, while the 15-year Treasury bond first sold in 2015 will attract a coupon rate of 12.750%.
The fiscal deficit as a proportion of Gross Domestic Product (GDP) is estimated at 8.1% in the 2021/22 fiscal year, an increase from the 7.5% recorded in the 2019/20 fiscal year. However, this is a slight decline from the 8.2% recorded in the 2020/21 fiscal year.
“The key driver of this fiscal deficit has been increased recurrent expenditure which includes higher interest expenses on public debt,” according to Sterling Capital Research.
As of 24 June, the government was 5.9% ahead of its Kshs 664.0 billion borrowing targets for the FY’2021/2022 having borrowed a total of Kshs 703.2 billion.
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