The Central Bank of Kenya (CBK) has invited bids for a 21-year amortized infrastructure bond worth KSh 75 Billion in September 2021.
The purpose of the bond is to fund infrastructure projects as outlined in the 2021/2022 National Budget Estimates.
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).
National Treasury has allocated KSh 182.5 Billion to the Transport docket in the current budget.
The list of priority infrastructure projects listed in the current budget includes the Nairobi Bus Rapid Transport System, costing KSh 700 Million, construction of the next phase of the Standard Gauge Railway (SGR) from Nairobi to Naivasha at KSh 7.2 Billion and KSh 7.5 Billion for the Lamu Port-South Sudan, Ethiopia Transport Corridor.
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.
According to the prospectus by the CBK, the redemption structure is 1st September 2031-50% of unencumbered outstanding principal amount and 18th August 2042 for 100% -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 Central Bank will rediscount the bond at 3% above the prevailing market yield or coupon rate, whichever is higher, upon written confirmation to do so from the NSE.
The infrastructure bond is set to be listed on the NSE with its secondary trading in multiples of KSh 50,000.00 to commence on Tuesday, 14th September 2021.