CS Ukur Yattani (PHOTO: FILE) The National Treasury will borrow Sh60 billion from local investors for infrastructure development, the latest prospectus by the Central Bank of Kenya (CBK) shows.
This even as the country’s debt stockpiled to Sh7.35 trillion in January this year from Sh7.28 trillion last December.
Should Treasury receive all the Sh262 billion from the International Monetary Fund (IMF) in the current financial year ending June, Kenya will have borrowed close to a Sh1 trillion by this financial year.
This will also depend on whether part of the IMF funds that Kenya will receive will be used to refinance some of the maturing external loans.
CBK, which is also the fiscal agent of Treasury, noted in the prospectus that the bond will be an 18th-year old paper whose interest rate will be determined by the market. Being an infrastructure bond, investors will not be charged taxes on the yields. Read More
By March 19, the government had borrowed Sh407.8 billion from the market, including commercial banks, pension funds, insurance firms and parastatals. But with the new infrastructure bond, the stock of domestic bond will increase to Sh467.8 billion should CBK get sufficient subscribers.
The bond can be oversubscribed, allowing CBK to borrow more than Sh60 billion as long as it does not go beyond target for the current financial year ending June.
Similarly, the bond might also be undersubscribed, with the CBK having the option of returning to the market.
The bond will be traded in the secondary market of the Nairobi Securities Exchange (NSE) in the multiples of Sh50,000, starting April 13, 2021.
Treasury is keen to have the debt ceiling raised from the current Sh9 trillion as it moves to borrow more money to finance its post-Covid-19 economic recovery strategy.
Whereas Treasury has insisted that it will stay away from expensive commercial loans, it recently signalled that Kenya might have to return to the Eurobond market to borrow at least Sh124 billion by end of June next year.The money will be used to offset part of the principal repayment of Sh351 billion that needs to be refinanced or repaid using borrowed money.Returning to international capital markets is Kenya’s Plan B with National Treasury still hoping to secure cheap loans from multilateral institutions such as the World Bank, IMF and the African Development Bank.But with Kenya already having received over Sh500 billion from these institutions, Treasury might be forced to shop for other sources of […]
