Kenya now in line to take up nearly Ksh.800 billion in Eurobonds


Kenya now in line to take up nearly Ksh.800 billion in Eurobonds

In Summary

  • According to data contained in the International Monetary Fund (IMF) new report on Kenya entailing new borrowings between April 1 to June 30, 2022, Kenya is set to issue an initial Ksh.249.8 billion ($2.3 billion) Eurobond for project financing.
  • Subsequently, Kenya is set to issue Ksh.543 ($5 billion) Eurobond for the purpose of debt management operations which include the financing of the 2024 Eurobond and retiring of relatively expensive syndicated loans.
  • The National Treasury has applied and received exemption from the IMF to tap debt from Eurobond issues even as it enjoys concessional financing from both the IMF credit lines and the World Bank Development Policy Operations (DPO).

Kenya is in line to take up nearly Ksh.800 billion in Eurobonds over the next 18 months as it marks its return to the international commercial debt market.

According to data contained in the International Monetary Fund (IMF) new report on Kenya entailing new borrowings between April 1 to June 30, 2022, Kenya is set to issue an initial Ksh.249.8 billion ($2.3 billion) Eurobond for project financing.

Subsequently, Kenya is set to issue Ksh.543 ($5 billion) Eurobond for the purpose of debt management operations which include the financing of the 2024 Eurobond and retiring of relatively expensive syndicated loans.

The National Treasury has applied and received exemption from the IMF to tap debt from Eurobond issues even as it enjoys concessional financing from both the IMF credit lines and the World Bank Development Policy Operations (DPO).

“While Kenya is at high risk of debt distress and subject to zero limits on non-concessional borrowing, the authorities have requested, and staff supports, non-zero limit exceptions for project financing and debt management operations,” stated the IMF.

Over the same period running to December 2022, Kenya will be tapping Ksh.521.2 billion ($4.8 billion) in concessional borrowing, externally.

At the same time, the domestic market is set to remain as an integral part of public financing.
The National Treasury is seeking to leverage the new borrowing schedule to extend time to maturity on debt as a means to cushion Kenya’s rising debt distress.

“On debt management issues, the authorities emphasized their efforts to extend the maturity of domestic debt and need to pursue a financing strategy that balances domestic and external financing, utilizes concessional financing where available, and accesses private capital markets judiciously,” added the IMF report.

Kenya’s return to the infamous Eurobonds will mark its fifth stab at the international capital markets in just six years.

The country’s inaugural Eurobond in June 2014 raised Ksh.219 billion ($2.1 billion) before immersing a further Ksh.82.1 billion ($750 million) in an extended/tap sale.

Kenya would later issue a pair of Eurobonds in 2018 and 2019 raising a total of Ksh.449 billion ($4.1 billion) in the process.

Part of proceeds from the expected Eurobond issues are expected to retire the 2024 Eurobond.

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Story By Kepha Muiruri
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