Nairobi, Kenya: Kenya Railways Corporation (KRC) is seeking to revive the planned $200 million (Sh16.6 billion) bond issue.
Managing Director of Kenya Railways Corporation Nduva Muli
Managing Director Nduva Muli said the Corporation would be revisiting the stalled capital-raising programme once the economic environment improves. The bond was expected to go to the market during the first quarter of 2012 after receiving Cabinet approval in 2011.
But the State-owned Corporation suspended issuance of the debt instrument due to a high interest rate regime and confusion in the bond market, which saw several foreign investors eyeing the local debt market exit.
“For the time being, the Government is still supporting us through a budgetary process. But given that this is a long-term project we shall still re-assess the economic environment to see whether the interest rates have improved and fairly competitive to issue a bond,” Nduva told The Standard on Thursday. The proceeds of the bond issue are meant to finance the upgrade of the Nairobi commuter rail system.
Mugo Kibati, head of Vision 2030 had earlier said the Government was considering alternative financing options including that from the development partners following a mess in the bond market.
“With that process (bond issue) we had to go a different route. At this high level of interest rates at 25 per cent it is not common sense to float a bond. It is too expensive,” said Kibati, adding that,” We decided to go a different route.”
The proceeds of the bond issue was meant to finance KRC plans to build a 7km (4.4 mile) link from the capital’s airport to the city centre in order to ease Nairobi’s infamous traffic jams which investors complain of choking commercial activities in east Africa’s largest economy.
Dubbed the metropolitan rail transport system, the project is part of KRC’s Railway Master Plan, which seeks to overhaul the entire rail transport system in the country by 2050.
By James Anyanzwa, The Standard
