Treasury Cabinet Secretary John Mbadi has hinted that the government could issue an infrastructure bond, a move that would provide Kenya with long-term financing for development projects while supporting its strategy to manage public debt through domestic borrowing.

🇰🇪 Breaking It Down

Speaking during a media interview on the sidelines of the Kisumu Nyota Second Tranche event on Friday, July 10, Mbadi, however, declined to confirm whether an issuance was imminent, saying such decisions are made jointly with the Central Bank of Kenya (CBK).

"There may be a possibility of issuing an Infrastructure Bond, but I do not want to because that is a decision that is made between the Treasury and the CBK, and it is not wise to announce an Infrastructure Bond before the time comes," Mbadi said.

His remarks are the clearest indication yet that the Treasury is considering an infrastructure bond after months of speculation among investors and market participants over the absence of such an issuance in 2026.

📌 What You Need to Know

Infrastructure bonds are long-term government securities issued to raise funds for major public projects such as roads, railways, ports, energy, water and other critical infrastructure.

Unlike ordinary Treasury bonds, they have traditionally attracted strong investor interest because the interest earned is tax-exempt, making them more attractive to both institutional and retail investors.

Apart from financing development projects, infrastructure bonds play a key role in the government's borrowing strategy by enabling the Treasury to raise long-term funds in the local market rather than relying heavily on external commercial debt.

Borrowing in Kenyan shillings also shields the government from exchange-rate risks associated with foreign-currency loans.

The National Treasury has previously indicated in its Annual Borrowing Plan that infrastructure bonds would remain part of its domestic financing programme, complementing benchmark Treasury bonds while helping lengthen the maturity profile of public debt and improve liquidity in the local bond market.

A new infrastructure bond would also come at a time when the government is balancing the need to finance development projects with efforts to contain borrowing costs and reduce refinancing risks arising from short-term debt.

📰 Source: Kenyans.co.ke