By James Anyanzwa

The KenGen Public Infrastructure Bond (PIBO) commenced trading on the Nairobi Stock Exchange (NSE) on Monday, amidst expectations of an active secondary market.

Mr Eddy Njoroge, the company’s managing director, said the growing appetite for long-term debt instruments in Kenya was likely to drive increased activity in the secondary market.

‘‘We saw an overwhelming response during the offer period and expect that investors will be seeking bond offers in the market once trading begins," he said.

Njoroge was speaking at the NSE trading floor on Monday, during a bell ringing ceremony to mark the listing of the company’s bond.

Njoroge underscored the role KenGen played in deepening the debt capital market in Kenya by facilitating participation.

‘‘I am delighted to note KenGen played an important role in deepening the involvement of retail investors in the debt capital market by issuing the first ever public infrastructure bond,’’ he said.

KenGen bond attracted applications for Sh26.6 billion, against a target of Sh15 billion. The power generating company absorbed Sh25 billion, since the bond has a Sh10 billion green shoe option.

The proceeds of the bond would be used to fast track the company’s power generation projects, which include producing an additional 1500 MW to its generation capacity by 2012.

Njoroge said KenGen was at an advanced stage of rolling out a 600 MW coal power project under a joint venture arrangement in Mombasa.

"This will help us stabilize the power situation in Kenya before we start implementing our plans to add 1,500 MW of capacity from 2013, primarily through geothermal sources, which are reliable and renewable," he said.

He said this would increase KenGen’s generation capacity significantly, and create a sustainable power supply in line with the company’s business strategy of diversifying electric power sources.

Njoroge said investments in additional power generation capacity require substantial funds in excess of $5 billion (Sh380 billion).

‘’We are exploring various financing options including issuing a multi-currency infrastructure bond in the next 18 months,’’ he said.