Kenya’s bond oversubscription signals fiscal shifts

Jan 29, 2024|Beryl Nyajuoga
Key questions
  1. Why did Kenya issue the infrastructure bond?
  2. What factors contributed to the attractiveness of the infrastructure bond?

In response to budget constraints, the Kenyan government issued two infrastructure bonds in the fiscal year 2023/2024 to support its infrastructure projects. The initial offering, a Kes 50 billion ($334 million) bond with a six-and-a-half-year amortisation period, was floated on October 20th, 2023. This bond garnered considerable attention, achieving a 177.8% oversubscription and a final coupon rate of 17.9%. Following this success, a second bond was issued on January 19th, 2024. This bond, larger at Kes 70 billion ($429 million), was set for an eight-and-a-half-year maturity.

Fiscal year 2023/2024 also saw a significant allocation for development projects, representing 20.2% of the total budget or Kes 743.5 million ($4.8 billion) from a total of Kes 3.68 trillion ($24.0 billion). Within this allocation, infrastructure projects constituted 63% of development spending. Although this marked a 12.4% increase to Kes 468.2 billion ($3.0 billion) over the previous fiscal year, development expenditure has nonetheless been

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