In order to fund several big-ticket public projects, Treasury through its fiscal agent, the Central Bank of Kenya(CBK), invites bids for KSh 70 Billion amortized infrastructure bond.
Top on the list of infrastructure projects outlined in the current budget is the second phase of the Nairobi-Naivasha Standard Gauge Railway(SGR) that costs KSh 18.1 billion.
Other major projects include KSh 15.5 Billion for housing, urban development and public works sector, out of which KSh 6.9 Billion will cater for the Affordable Housing Programme, KSh 6.0 billion for the LAPSSET Project and KSh 5.0 billion for the Mombasa Port Development Project.
The 11-year amortized infrastructure bond, with a coupon rate of 10.900% will be up for sale between 28th July 2020 and 18th August 2020 with investors required to submit a minimum bid amount of KSh 100,000.
The bond will be tax-free as is the case for Infrastructure Bonds as provided for under the Income Tax Act.
Investors can redeem 50% of the outstanding principal amounts on 17th August 2026 with final redemption on all outstanding amounts on 11th August 2031.
Bids must be submitted to CBK close by 2.00 pm on 18th August 2020 with the auction taking place the following day.
The CBK will rediscount the bond as a last resort at 3% above the prevailing market yield or coupon rate whichever is higher, upon written confirmation to do so from the Nairobi Securities Exchange(NSE).
The bond qualifies for statutory liquidity ratio requirements for Commercial Banks and NonBank Financial Institutions as stipulated in the Banking Act CAP 488 of the Laws of Kenya.
The bond will trade at the Nairobi bourse and may be re-opened at a future date. Secondary trading in multiples of KSh 50,000.00 will commence on Tuesday, 25th August 2020.