Laikipia County applies for infrastructure bond approval from Treasury

Laikipia Governor Ndiritu Muriithi has already applied for a National Treasury guarantee for the County’s Ksh.1.16 billion infrastructure bond.

Governor Muriithi presented the request to Treasury Cabinet Secretary Ukur Yatani on Thursday at the Treasury building, Nairobi.

This comes a week after Laikipia County Assembly approved an infrastructure bond issue. The bond makes Laikipia the first of its kind in the country to finance development through a bond issue.

Five other counties are also keen to take a similar move and are currently benchmarking with Laikipia.

The bond is expected to fund the grading of roads in urban areas, installing street lighting, constructing dams, and beautification towns under the smart town initiative if it gets requisite regulatory approval from the Treasury, Commission on Revenue Allocation (CRA), and Capital Markets Authority (CMA).

It is a 7-year bond worth Ksh 1.16 billion which will be priced at 12 percent subject to approval by Treasury CS Yatani.

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“We expect it to be priced at the same level as a 7-year Treasury bond. The reason being it will enjoy Treasury guarantee,” said Governor Muriithi.

The law requires Counties to be guaranteed by the Treasury to raise cash from investors upon meeting stringent conditions such as the ability to repay as reflected by revenue collection trends and viability of capital projects to be funded.

The idea by Laikipia County to roll out infrastructure was incepted when it received a first credit rating report which indicated a stable outlook for the County.

It joined the list of pioneer counties with a credit rating – Makueni, Kisumu and Bungoma counties a year later.

The three pioneer counties were rated under the World Bank-funded Kenya county creditworthiness initiative, which is a collaboration between the National Treasury, the Commission on Revenue Allocation (CRA) and the Capital Markets Authority (CMA).

Edited by Lawrence Baraza and approved by Ken Aseka.