The government has floated a 15-year infrastructure bond worth Sh40 billion, exerting more pressure on the high public debt that is threatening to cross the Sh5 trillion mark
According to Central Bank's January prospectus, the amortised fixed coupon infrastructure bond will earn investors 12.5 per cent interest per annum, with the minimum investment of Sh100,000 and a maximum of Sh20 million per investor.
Duly completed bond application forms must be submitted to any branch of the Central Bank in the specified tender box by January 24, 2018. Announcement of successful bids will be on January 25, 2018,'' CBK said in a statement on Tuesday.
Secondary trading in multiples of Sh50,000 will commence on January 30, 2018.
The new infrastructure bond comes as experts question the sustainability of the country's increasing public debt that reached a high of Sh4.48 trillion in November last year.
Speaking while unveiling Barclays Africa's micro economic report for Kenya and Sub Saharan Africa, chief economist Jeff Gable termed the continent's high infrastructure loan as worrisome and urged the Kenyan government to consider public private partnerships as opposed to expensive external loans.
"What is interesting and also quite sad is that in Kenya, for every Sh3 collected in tax, Sh1 goes to paying interest on debt as opposed to growth of the country,'' said Gable.
In October last year, global credit rating agency, Mooody's, placed Kenya's B1 long term issuer rating on review for downgrade, a factor that is likely to lower the country's creditworthiness, hence attract high interests on syndicated facilities.
The dust of the new infrastructure bond was still in the air when Reuters reported that the government had secured a $750 million (Sh77.2 billion) syndicated loan for seven years.
This was from the Trade Development Bank (TDB), to pay off creditors in another two-year syndicated loan that was extended last year
A source privy to the deal told Reuters there is a large appetite for Eurobonds in the global market, a move that is likely to see the state issue yet another $1.5 billion Eurobond for 10 years by the first week of March this year.
In late October last year, the government extended repayment of the Sh75 billion syndicated loan it took in 2015 by six months to April this year, an indication that Kenya was struggling to repay its debt due to low revenue collection.