The Capital Markets Authority (CMA) is calling on county governments to tap the capital markets to raise long term capital to finance key development projects.
CMA Chief Executive Officer Wycliffe Shamaya says the 47 devolved units have an estimated Kshs 1.1 trillion infrastructure funding gap and only four counties have so far shown interest in floating infrastructure bonds.
Makueni, Laikipia, Bungoma and Kisumu are the four counties that have undergone a credit rating assessment in readiness to float county treasury bonds.
According to Shamaya CMA expects to engage the National Treasury & Planning for consideration of guidelines for issuance of County Bonds.
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Shamaya says the devolved units should also take advantage of the new regulations by the National Treasury that allows counties to borrow up to 20% of their annual revenue collections.
This comes as the markets regulator reported increased appetite for green bonds as more investors target sustainable and viable options away from the corporate bonds.
“There is focused implementation of the Post Covid-19 Capital Markets Recovery Strategy to harness the unique advantage of the capital market especially in playing a facilitative role in promoting uptake of capital market products and additional listings,” said Shamaya.
CMA first quarter soundness report indicates that there was low volatility in the first three months of this year as NSE listed companies recorded no major changes in share prices due to predictability of corporate actions.
Liquidity remained low in the NSE but relatively lower that quarter two of 2020.
However, there was a slight reduction in aggregate foreign investor contribution to turnover with a slight increase in domestic investor participation in secondary trading.
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