Kenya is offering infrastructure bonds for the first time in order to cover its spending needs in the expanding transportation networks and electricity infrastructure.
According to the Central Bank of Kenya, the 12-year bonds are worth US$ 168million at a fixed rate of 11%. The sale of the bonds close on October 21st and the money will be used in financing infrastructure such as roads, energy, water and irrigation projects in the country.
The Kenyan government needs money to deliver its investments needs with projects such as roads, a railway, and a port, and to lay down a pipeline for the oil reserves that are being developed in the country.
The named projects are expected to accelerate growth in government investment by 30% in 2016-2017 compared with the 16% in the current fiscal year. Kenya is struggling to narrow its budget deficit with its investment needs of $4 billion termed one of the largest in Africa by African Development Bank.
This comes after a successful debut Eurobond sale on the international market that saw Kenya raise $2 billion in 5-year and 10-year notes to finance for capital projects. The portion maturing in 2024 carried an interest rate of 6.875%.
Kenya recently announced that it would start off construction of 3000 km of roads, as part of the aggressive 10, 000km to either be newly constructed or rehabilitated.