The government’s appetite for domestic debt has been growing as witnessed in the recent revising of the debt ceiling.
This week marks the closure of a 16-year Ksh60 infrastructure bond expected to mature in 2035.
In a prospectus, CBK said the bond intended to raise the monies to finance infrastructural projects for the FY 2019/20.
The bond was market-determined and will be listed on the Nairobi Securities Exchange.
Central bank data shows that the bond was oversubscribed as total bids received amounted to Ksh86.9B. However, the bank accepted Ksh68.5B representing a 12.3 percent weighted average rate of accepted bids.
Debt Sustainability
The government is using external and domestic borrowing to finance budget deficits leading to concerns on debt sustainability. The World Bank and IMF have warned Kenya about the ballooning debt as debt to GDP ratio rise to 62 per cent.
Furthermore, analysts believe that many countries across sub-Saharan Africa area risk of high debt distress due to growing sovereign borrowing.
For Kenya, the National Assembly revised the debt ceiling moving the borrowing cap from 50 per cent of GDP to an absolute figure of 9 trillion.
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