The government is set to borrow Sh60 billion from the domestic market next week.
The Central Bank of Kenya (CBK) said yesterday the nine-year bond is to
finance infrastructure developments and will pay an interest rate of 10.85 per cent. It will be redeemed in phases, with the first one scheduled for April 2025. The second phase will fully mature by April 2029.
The apex bank said the proceeds from the sale of the bond would be used to fund infrastructure projects in the 2019/20 financial year budget estimates. “The bond will be tax-free as is the case for infrastructure bonds as provided for under the Income Tax Act,” said CBK in a notice inviting bids from investors. Budgetary support
Other issues attract an income tax of 10 per cent. Investors will be required to put in a minimum investment of Sh100,000 by April 7, with the auction taking place on April 8. The bond will up Kenya’s debt amid sustainability concerns.
By the end of the current financial year, Treasury expects to borrow Sh300 billion from the domestic market for budgetary support including development. Domestic debt stood at Sh3.046 trillion as of March this year, accounting for about 50 per cent of Kenya’s total public debt at Sh6 trillion as of December 2019.
The State has in the recent past found it difficult to raise money through Treasury Bills and Bonds owing to under-subscription with Treasury experiencing difficulties borrowing money to retire maturing loans. [Macharia Kamau]
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