The Sh44.79 billion Talanta Sports City-backed infrastructure bond has been fully subscribed, boosting the government's hopes of finishing the facility in time to host the 2027 African Cup of Nations.
Investors offered Linzi Finco, the issuer of the bond, Sh44.875 billion against a target of Sh44.791 billion, representing a subscription of 100.2 percent. Sources told Business Daily the entire amount was raised from Kenyan investors.
The 15-year asset backed bond with an annual return of 15.04 percent annually, will be listed on the Nairobi Securities Exchange on July 8, 2025 in the restricted fixed income market sub-segment.
“Following the closing of the offer period on June 30, Linzi FinCo is pleased to announce that it received applications for securities amounting to Sh44,875,600,000 against the target of Sh44,791,000,000. Investors will be allotted on a pr-rata basis,” said Linzi Finco in a statement.
Successful subscription of the bond opens the door for the government to pay the contractor, China Road and Bridge Corporation, for work already done and push for acceleration of the project located along Ngong Road.
The 60,000 seater stadium was 37 percent done at the end of April, with the contractor continuing with the works despite the government having paid only five percent of the total construction works.
The issuer has loaded a premium on the asset backed bond with 15-year infrastructure bonds currently offering returns of about 13 percent. Principal and interest payments on the asset-backed bond will be made semi-annually. The principal will be repaid in equal amounts of about Sh2.98 billion per annum, meaning that the expense on interest will go down over time.
The bond is accorded an AA rating by South African agency GCR Ratings with absence of an explicit government guarantee being cited for denying it a higher rating. An AA rating means the issuer has very strong credit worthiness.
Investors however shrugged off the absence of the explicit guarantee taking comfort in the premium offered by the bond and its structuring that has Kenya Commercial Bank offering a standby letter of credit in case of delayed payments.
In case the Sports Fund is dissolved, the bondholders shall be transferred to the National Exchequer Account. Bondholders will be paid from the National Treasury disbursements made to the Sports, Arts and Social Development Fund (SASDF) and not proceeds from the stadium.
Trading at the restricted segment locks out retail investors who may not be able to analyse the risk carried by such instruments and also need very liquid counters to unlock cash in case of emergency.
The Ministry of Defense is the contracting authority of the project having been given supervisory powers by President William Ruto owing to their reputation of prompt execution. Sports Kenya is the project owner with SASDF being the originator.
SASDF, which was created under the 2018 Public Finance Management Regulations, has been allocated Sh13.5 billion in the financial year starting July.
