The government through the Ministry of Treasury on Wednesday, February 28, announced plans to raise Ksh40 billion within a fortnight for budgetary support.
To accomplish this goal, the government aims to conduct an auction of treasury bonds scheduled to occur between March 6 and March 20, 2024.
The investors will be loaning the government Ksh40 billion which will be repaid in three instalments in the years, 2027, 2028 and 2032.
"Discount or Interest is subject to withholding tax at a rate of 15 per cent for FXD1/2024/03 and FXD1/2023/05 and 10per cent for FXD1/2024/10," read part of the statement by the Central Bank.
With the Central Bank of Kenya as the paying agent, the placing agents or the intermediaries in the deal include Commercial Banks, Non-Bank Financial Institutions, Licensed Stock Brokers and Licensed Investment Advisors.
The bond will be listed on the Nairobi Securities Exchange and will only be eligible for investors with active Central Securities Depository (CSD) accounts with the Central Bank of Kenya.
“Defaulters may be suspended from subsequent investment in Government Securities,” CBK noted.
"The Central Bank reserves the right to accept bids in full or part thereof or reject them in total without giving any reason," it added.
On January 25 CBK similarly announced the auction of infrastructure bonds, the government sought to raise Ksh70 billion from investors.
The auction of the tax-free bonds lasted for three weeks and was conducted between January 24 to February 14, 2024.
Following the auction of the bonds, the government raised Ksh241 billion from investors, three times the amount it sought to raise.
The oversubscription of the bond contributed to the stability of the Kenyan Shilling against the dollar as foreign investors who seek the bonds utilise their dollars to buy the local currency.
