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State to list roads Sh175bn bond on Nairobi bourse
Road construction in Bomet East on September 16, 2025. Kenya’s payment of Sh56.9 billion in pending bills has revived road projects and lifted construction growth.
Photo credit: Vitalis Kimutai | Nation Media Group
The government plans to sell the Kenya Roads Board (KRB) bond to the general public and list the security on the Nairobi Securities Exchange.
President William Ruto has confirmed the move to issue the bond through the public markets, a move away from an earlier proposal by KRB to target the issuance to investment clubs.
Proceeds from the bond estimated at Sh175 billion are expected to settle bank loans which provided a bridge facility, enabling the settlement of road sector pending bills of the same amount up to December 2024.
Investors in the bond will receive settlements from the securitised road maintenance levy fund (RMLF) where Sh7 of every Sh25 from the sale of a litre of petrol and diesel is hived off.
“In the course of this year, we will be bringing to the market the road maintenance levy fund securitisation bond which has enabled us to settle the pending bills crisis that had stalled road projects everywhere in Kenya, " President Ruto said on Tuesday during the listing of Kenya Pipeline Company (KPC) shares.
“The RMLF has raised for us Sh175 billion and we will be bringing it here (to the Nairobi Securities Exchange) so people can trade it as well.”
The President has not set a date for the issuance of the bond which was initially expected to go to market at the end of 2025.
Four commercial banks, including the Trade and Development Bank (TDB), KCB Bank Kenya, Absa Bank Kenya and UBA Kenya Bank provided financing to clear the contractors' arrears ahead of the issuance of the roads bond programme.
The settlements have enabled contractors to resume works, contributing to the rebound of the construction sector in 2025.
The Sh175 billion bond will be the first of two, with the government mulling a second paper raising Sh125 billion to cover future arrears to contractors in the sector.
The Cabinet has approved the setting aside of Sh12 from the road maintenance levy fund (per sale of a litre of petrol or diesel) to facilitate payments to investors in the two bonds.
The issuance of the bonds will come even as the National Assembly pushes for powers to inspect the securitisation of government revenue streams.
Securitisation refers to ring-fencing of specific revenue streams to pay lenders funding various government projects, with the money acting as collateral.
The Public Debt and Privatisation Committee has warned that the reliance on alternative funding approaches may create additional debt risks while hiding shortfalls in the availability of mainstream financing like external debt.
Kenya further plans to securitise the yearly Sh32 billion railway development levy fund (RDL) to help fund the extension of the Standard Gauge Railway (SGR) from Naivasha to Kisumu, and onwards to Malaba on the border with Uganda.
“The committee recommends that all securitisation and commitment of public money be subjected to transparent disclosure and parliamentary oversight, including publication of the fiscal implications of these commitments to the future debt sustainability,” the committee said in a report on its consideration of the Medium-Term Debt Management Strategy.
“The committee observed that declining concessional financing, alongside increased reliance on alternative approaches such as PPPs and securitisation, may mass underlying external financing constraints while creating additional contingent and fiscal risks that require transparent disclosure and integration into fiscal risk management.”
The stock of national government pending bills fell Sh56.9 billion in three months to December 2025 as the State accelerated efforts to settle the arrears, especially road contractor bills.
Total national government pending bills fell to Sh468.5 billion at the end of the quarter to December from Sh525.4 billion in the previous quarter.
