Kenya seeks external debt advisor ahead of new Eurobond

The National Treasury has sought to onboard a sovereign debt advisory firm ahead of its return to the Eurobond market later in the year.

In a tender notice published on Tuesday, the exchequer says the advisory firm will support Treasury’s efforts in managing its external debt portfolio.

“The main objective of the assignment is to provide liability management advisory services to the government of Kenya , through the National Treasury to restructure some external commercial debt to lower costs and risks in the public debt portfolio and improve debt sustainability,” reads part of the notice.

The sovereign debt advisory is expected to review the terms and conditions of underlying loans/arrangements for selected external commercial debt and detail costs and risks in each selected external commercial loan contract.

Additionally, the advisory is expected to recommend a variety of liability management operations to improve the present value of identified debt and provide support in the execution of remedial actions on liability management.

The hiring of a new sovereign debt advisory comes ahead of Kenya’s return to the Eurobond market in the next few months from which it seeks to raise nearly Ksh.800 billion.

According to a report by the International Monetary Fund (IMF) on Kenya, published a fortnight ago, Kenya plans to take an estimated Ksh.788.4 billion ($7.3 billion) from the market in the next 18 months.

This to include Ksh.248.4 billion ($2.3 billion) for project financing and another Ksh.540 billion ($5 billion) to retire Kenya’s first Eurobond taken in June 2014 and retire other syndicated loans taken between 2014 and 2018.

The National Treasury has since applied and received exemption from the IMF to access the external commercial financing even as it leverages concessional funding from the Bretton Woods parties.

“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.