Business News
State in plans for new bonds
The Government is planning to return to the market for long-term borrowing to finance infrastructure, with the final meeting to hash out the full details held on Friday.
It will be the second time the government will be turning to the domestic market to raise funds to finance development projects. In March this year, it raised Sh18.5 billion through the country’s first infrastructure bond — a long-term means of borrowing to fund long-term projects — attracting over 1,500 applicants and Sh26.9 billion.
Its majority-owned Kenya Electricity Generating Company (KenGen), managed to raise Sh26 billion through a planned Sh15 billion bond and an extra Sh10 billion out of the oversubscription. “Please start preparing for it,” Mr Mwenda Marete in charge of securities trading at Central Bank of Kenya (CBK), told a meeting organised by the Bond Traders Association (BTA). CBK is the government’s borrowing agent.
The meeting had been called on Thursday to inform members and industry players of the initiative being carried out in the market to deepen bond trading. Details on how the money raised in March was used will be released next week, addressing market concern of whether the funds were used and in the projects designated.
In the prospectus, Sh3.1 billion was allocated for water and sewerage projects across the country and Sh6.4 billion for road projects in which the Mau Summit-Kisumu road and expansion of Thika road are the main beneficiaries. The remainder, Sh7.9 billion, was set aside for drilling of Olkaria IV electricity generation and for use in the Rural Electrification Programmes.
Additional power
The KenGen bond fund will be used to finance investments in additional power generation capacity with about 80 per cent of the fund going to increase generation of thermal power, while the remainder will go towards upgrading power plants at the Tana River Delta.
Meanwhile, CBK will soon be introducing online biding and online notification, allowing investors to place their bids for the government credit papers through internet, as well as checking account balances. “These will be possible once we complete automation,” Mr Marete said.
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