The Government of Kenya plans to issue a KES 175 billion securitized roads bond in February with proceeds earmarked for clearing pending bills owed to contractors and repaying loans from commercial lenders.
The Kenya Roads Board (KRB) Acting Director General Mr. Martin Agumbi stated that the bond will be issued in tranches with investment clubs prioritized over the open market. Mr. Agumbi attributed the phased issuance to the local market’s limited capacity to absorb such a large offering at once.
“We are going to the markets next month (February) and this bond will be issued in tranches with a preference to investment clubs. The proceeds will be fully used to pay the loans that we have taken to settle the pending bills,” said Mr. Agumbi.
“The local market cannot accommodate a single issuance of the KES 175 billion, and this is why wea re doing it in tranches,” he added.
Lenders set to benefit from the proceeds include Trade Development Bank, KCB Bank Kenya, UBA Bank Kenya and Absa. The National Treasury had earlier planned to sell the bond in November 2025, but the plan did not hatch. Nigerian banking giant UBA Group PLC had committed to invest $150 million or KES 19.3 billion, equivalent to 11% of the targeted amount.
Bond’s securitization
The bond is backed by the Roads Maintenance Levy (RML) Fund, with a Special Purpose Vehicle (SPV) handling the funds. Securitization is the pooling together of financial assets such as loans, mortgages, cash flow generating assets and converting them into tradable securities which investors can buy. Investors earn returns from the cash flows. In this case, the RML. In 2024, the government increased the levy by 38.9% to KES 25 per litre, up from KES 18 per litre.
Also Read: CBK Issues Prospectus for 15- and 25-year Reopened Bonds
