The ongoing construction of the 84km Kenol-Sagana-Marua road at the Marua Interchange in Nyeri County on January 12, 2026. The government will issue a Sh175 billion securitised roads bond in February.
Kenya will issue a Sh175 billion securitised roads bond in February, with proceeds used to settle pending bills to contractors and repay loans from commercial banks.
Martin Agumbi, the acting Director General of the Kenya Roads Board (KRB), said yesterday that the bond will be issued in tranches and with a preference to investment clubs over the open markets.
“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,” he said in an interview.
“The local market cannot accommodate a single issuance of the Sh175 billion bond, and this is why we are doing it in tranches,” he added.
The proceeds of the bond will be used to pay commercial banks, including Trade Development Bank, KCB Bank Kenya, UBA Bank Kenya and Absa. These lenders have given the State loans to clear part of the Sh650 billion worth of pending bills, easing a cash crunch on contractors and allowing resumption of works that had stalled.
Construction work on Ngong-Suswa road in Kajiado County.
The Treasury had earlier said that the bond would be sold in November last year, but this did not materialise.
Mr Agumbi did not disclose the number of tranches and the value of each. The bond is secured by the Road Maintenance Levy (RML) Fund, with a special purpose vehicle managing the funds. The final pricing of the bond has not yet been disclosed.
A section of Treasury officials last year pushed for returns of 1.5 percentage points above the prevailing rates of the 91-day Treasury bills, which is currently 7.72 percent. The Treasury has been grappling with struggles in paying road contractors, leading to stalled projects after contractors downed tools.
Securitisation has since emerged as a convenient route to raise billions of shillings and pay contractors without tapping fresh loans.
Under the current plan, the government has tapped Sh174 billion worth of loans from commercial banks since last year to pay the contractors. The money has been used to pay pending bills that accumulated from 2005 to the end of 2024.
The government is also set to borrow an additional Sh120 billion from commercial banks to pay the debts that have been cleared for payment since last year and avert stalling of road works.
The Nairobi-Western bypass that starts from Gitaru area in Kiambu County.
The loans have been backed using Sh12 from every Sh25 collected as RML for each litre of petrol and diesel sold. The government had initially targeted to sell the first road bond four years ago to raise money to clear pending bills and fund the construction of new highways.
But it shelved the plan for fear of upsetting a funding arrangement that Kenya had made with the International Monetary Fund. The deal with the Bretton Woods institution ended in April last year.
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