FSD Africa is supporting the set-up of the Kenya Credit Enhancement Facility. This proposed non-bank financial institution will be set up in Kenya to facilitate the issuance of irrevocable and unconditional credit guarantees for long-term local currency debt backed by infrastructure-related projects.

This credit enhancement is expected to catalyse investment by institutional investors into corporate issuances. KCEF will provide a 100% guarantee, transferring credit risk from the sponsor to KCEF. Given the high target rating of KCEF, the wrap will enable domestic institutional investors to invest in the bonds issued by sponsors. Over time, it is expected, as has happened elsewhere, that sponsors will make repeat issuances without credit guarantees.