Kenya is planning to issue its first ever road bond worth US $1.5billion to go towards rehabilitation of dilapidated road network across the country.
Infrastructure Principal Secretary Paul Maringa told Parliament that the bond will be issued by June this year through the Treasury.
He explained that that part of the proceeds will be used to settle pending bills covering the period up to June 30.
“The government has empowered the Kenya Roads Board (KRB) to borrow funds from commercial lenders leveraged by annual parliamentary appropriations under the development budget. It will take over 10 years to pay off the current outstanding commitments, assuming no new projects are brought on board,” said Prof Maringa, Construction Review reported.
The balance is expected to finance works from July 1 to September 30 followed by issuance of a second bond. The timings for the flotation and structure of the second bond will be guided by the Treasury.
The PS also noted that the roads sub sector requires about US $6.4bn to clear all outstanding commitments on ongoing projects.
“The net government capital project allocation under Kenya National Highways Authority (KeNHA), Kenya Rural Roads Authority (KeRRA) and Kenya Urban Roads Authority (Kura) will be collapsed into one-line transfer to KRB in the 2020/21 budget. As such a US $513m allocation, initially set at US $644m, for the three road agencies in the coming budget will also be channeled towards repayment of the roads bond. In addition, the US $367m road annuity programme will be discontinued and the funds also channeled through the roads bond,” he added.
Meanwhile, the South African Unit of the Standard Bank Group Limited (SBG) has issued its first-ever green bond worth $200 million. This is South Africa’s first offshore issuance and Africa’s largest green bond ever issued.
The green bond is a 10-year facility and is expected to make a significant impact on its economy to the year 2030. The issuance was executed through a private placement with the International Finance Corporation (IFC) a development finance institution of the World Bank Group that focuses on the private sector. The bond is set to be listed on the London Stock Exchange.
“this bond issue reflects SBG’s strategic focus on sustainable finance in line with” its “Social, Economic and Environmental (“SEE”) value drivers and vision to drive Africa’s growth with minimal adverse impact.” said Sim Tshabalala, the Chief Executive Officer of the SBG.
Eyewitness? Submit your stories now via social or:
Email: news@pulselive.co.ke
