The Central Bank of Kenya (CBK) has floated an 18-year Infrastructure bond worth KSh 75 billion. The Government intends to use proceeds from this auction to fund infrastructure projects in the 2021/22 budget estimates.
According to the CBK prospectus, the coupon rate for this bond will be market-determined with the period of sale from 23rd May 2022 to 7th June 2022.
CBK to fully redeem the bond in May 2040
The value and payment date is 13th June 2022, with investors required to place bids at a minimum of KSh 100,000.00. This bond will be fully redeemed on 21st May 2040, with the first interest payment scheduled for 12th December 2023.
CBK requires bidders to submit their bids by 2.00 p.m. on Tuesday, 7th June 2022, while the Auction Date is Wednesday, 8th June 2022.
Investors should obtain details of amounts payable for successful bids from the Central Bank of Kenya on Thursday, 9th June 2022.
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 from the Nairobi Securities Exchange(NSE).
Pension funds, which are allowed to invest up to 10.0% of their Assets Under Management (AUM) on infrastructure and alternative investments, are expected to show a keen interest in this infrastructure bond.
On the list of big-ticket public projects to be implemented in the 2021/22 financial year include phase II of the Standard Gauge Railway expected to cost KSh 27.2 billion and KSh 7.5 billion for the LAPSSET Project, KSh 50.1 billion to cater for transmission and distribution of power; KSh11.3 billion for development of geothermal energy; KSh 6.4 billion for the electrification of public facilities and KSh 1.3 billion for the development of nuclear energy.