Kenya's government has advertised a new six and a half year amortised infrastructure bond seeking to raise 50 billion shillings ($334 million) to fund development projects.      

The bond is to raise funds for infrastructure projects, the Central Bank of Kenya said in statement on Thursday evening.   

The bond will be on sale from October 20 to November 8, this year, it added.     

"The bond will be tax free as is the case for infrastructure bonds provided for under the Income Tax Act," it said.    

The market will determine the interest rate for the security.     

Bond holders have been pushing for higher interest rates to be paid on new government debt securities.

Rising inflation and the depreciation of the Kenyan shilling, two factors that reduce the value of fixed-income investors' portfolios, are driving the need for higher interest rates.  

The bond is part of measures by the government of the East African country to plug a budget deficit of 4.4% for the 2023/24 fiscal year that runs from July to the end of June.   

Kenya's finance minister Njuguna Ndung'u presented the budget against the backdrop of a sluggish economy, rising inflation and a slower-than-expected rate of tax collection.

(Editing by Seban Scaria seban.scaria@lseg.com)