The Central Bank of Kenya (CBK) published the prospectus for the November Treasury Bond and is seeking to raise Ksh.50 billion to finance infrastructure projects in the fiscal year 2023/24 budget estimates.
The paper is an amortised infrastructure with a duration of 6.5 years.
An amortized bond is one in which the debt’s principal (face value) is paid down regularly, along with its interest expense over the bond’s life.
Conditions attached to the paper include a minimum of Ksh.50,000 and a maximum of Ksh.50 million per CDS account per tenure whose coupon rate will be market determined.
It is a tax-free infrastructure whose interest rate will be determined by investors, calculated as the weighted average rates of the accepted bids.
The bond matures on May 6, 2030 but half of the principal – any amounts up to Ksh.1 million – will be repaid midway on May 10, 2027.
Infrastructure bonds have typically attracted strong subscriptions due to their tax-free status and the high rates that which they are sold.
The bond is on auction until November 8, 2023.