The government through the Central Bank of Kenya (CBK) is inviting interested investors, both local and international to buy Ksh50 billion worth bonds.
CBK announced that the bonds, meant for infrastructure development for the fiscal year 2024/2025 are tax-free.
Additionally, the bond issuance comes with a minimum investment of Ksh50,000, making it accessible to a wide range of investors, from individuals to large institutions.
“Central Bank of Kenya, acting in its capacity as fiscal agent for the Republic of Kenya, invites bids for the above bonds whose terms and conditions are as follows,
“The bonds will be tax free as is the case for Infrastructure Bonds as provided for under the income tax act” the statement read in part.
Deadlines and Best Bids for Investors
For investors looking for medium-term returns, the 5.8-year bond (IFB1/2023/6.5) with a coupon rate of 17.9327 percent could be a good choice.
However, long-term investors can choose the 15.7-year bond (IFB1/2023/17) offering a 14.3990 percent coupon rate.
Nonetheless, both bonds are Nairobi Securities Exchange (NSE) listed and promise stable, predictable returns.
The funds raised will go into the development of critical infrastructure, including roads, bridges, energy, and water systems meant to fuel economic growth.
Also Read: Investors Snubbing Treasury Bonds Over Interest Rate Risks
CBK Details How to Bid
CBK has stated that an individual or entity can invest up to Ksh50 million per CSD (Central Securities Depository) account per tenor.
On the other hand, the smallest amount you can bid for is Ksh2 million per CSD account per tenor, with an exemption to State corporations, public universities, and Semi-Autonomous Government Agencies.
Moreover, bids for Treasury bonds must be submitted electronically to the Central Bank of Kenya via the CBK DhowCSD or TMD systems.
The deadline for submission is 10:00 AM on Wednesday, 14th August 2024. Also, investors are required to finalize their payments by August 16, 2024.
“Investors should obtain the payment key and amount payable for successful bids from the DhowCSD Investor Portal/App under the transactions tab on Friday 16th August 2024. Defaulters may be suspended from subsequent investment in Government Securities.
“The Central Bank will rediscount bonds as a last resort at 3% above the prevailing market yield or coupon rate whichever is higher, upon receiving written instructions from investors via the email rediscounts@centralbank go.ke.”
Also Read: CBK Lowers Lending Rate, Signals Cheaper Bank Loans
Reopening of Bonds
At the same time, CBK indicated that the bonds may be made available for purchase again after the initial offering period is closed.
After the bonds are issued, they can be bought and sold by investors in the market, starting from Monday, August 19, 2024.
If anyone wants to buy or sell these bonds after they start trading, they can only do so in amounts that are multiples of Ksh50,000.
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