Aerial View of the city of Nairobi, Kenya's capital city. Photo/FREDRICK ONYANGO
By James Anyanzwa
Nairobi, Kenya: Kenya Railways Corporation (KRC) is seeking to revive the planned $200 million (Sh16.6 billion) bond issue.
Managing Director Nduva Muli said the Corporation would be
revisiting the stalled capital-raising programme once the economic
environment improves. The bond was expected to go to the market during
the first quarter of 2012 after receiving Cabinet approval in 2011.
But the State-owned Corporation suspended issuance of the debt
instrument due to a high interest rate regime and confusion in the bond
market, which saw several foreign investors eyeing the local debt market
exit.
“For the time being, the Government is still supporting us through a
budgetary process. But given that this is a long-term project we shall
still re-assess the economic environment to see whether the interest
rates have improved and fairly competitive to issue a bond,” Nduva told The Standard on Thursday. The proceeds of the bond issue are meant to finance the upgrade of the Nairobi commuter rail system.
Mugo Kibati, head of Vision 2030 had earlier said the Government was
considering alternative financing options including that from the
development partners following a mess in the bond market.
“With that process (bond issue) we had to go a different route. At
this high level of interest rates at 25 per cent it is not common sense
to float a bond. It is too expensive,” said Kibati, adding that,” We
decided to go a different route.”
The proceeds of the bond issue was meant to finance KRC plans to
build a 7km (4.4 mile) link from the capital’s airport to the city
centre in order to ease Nairobi’s infamous traffic jams which investors
complain of choking commercial activities in east Africa’s largest
economy.
Dubbed the metropolitan rail transport system, the project is part of
KRC’s Railway Master Plan, which seeks to overhaul the entire rail
transport system in the country by 2050.
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