Treasury to refund Sh25 billion in oversubscribed bond

By John Njiraini

Treasury will refund Sh25 billion to investors who put their money in the country’s first infrastructure bond that was oversubscribed.

Finance Uhuru Kenyatta said the Government intends to use only Sh18.5 billion from the cash raised and will refund the rest to investors. A total of Sh43 billion was realised from the 12-year bond issue, which has a coupon rate of 12 per cent.

"We intend to take what we wanted," Uhuru said.

He termed the oversubscription an indication of faith in Government policies. The proceeds from the sale of the bond would be used to finance projects in energy, roads and water.

Uhuru expressed optimism that the second infrastructure bond, which was recently launched by the Central Bank of Kenya (CBK) would outperform expectations. The Government seeks to raise another Sh18.5 billion from the issue.

He stated that although the economy was on a recovery path with the onset of short rains and key sectors like the financial sector and the capital markets showing impressive performances, Treasury projects the country to register a 2.5 per Gross Domestic Product growth.

This is a downward revision compared to the three per cent growth projected by CBK Governor Prof Njuguna Ndung’u and 3.5 per cent projected by the World Bank.

"I want to be cautious because the rains are not adequate," he said.

The Minister was speaking during the signing of a memorandum of understanding (MoU) with the Rockefeller Foundation.

The MoU will enable the Foundation to continue its support for various projects in the country like food security and agricultural productivity, urban development, improved access to information and technology among others.

Present during the ceremony was Rockefeller Foundation President Dr Judith Rodin.