Treasury excludes Eurobonds in planned restructure of foreign commercial debt


Treasury excludes Eurobonds in planned restructure of foreign commercial debt

In Summary

  • The exclusion of the international sovereign bonds has seen the exchequer cancel last week’s tender which sought for sovereign debt advisory services.
  • The Planning Ministry has subsequently put up a new tender limiting the advisory services sought to the restructure of syndicated commercial loans.
  • The inclusion of Eurobonds in the planned liability management operations caused jitters among holders of Kenya’s Eurobonds, with yields on existing sovereign bond issuance's rising in the aftermath of the tender advertisement.

The National Treasury has removed Eurobonds from its planned restructure of external commercial loans.

The exclusion of the international sovereign bonds has seen the exchequer cancel last week’s tender which sought for sovereign debt advisory services.

The Planning Ministry has subsequently put up a new tender limiting the advisory services sought to the restructure of syndicated commercial loans.

“The proposed assignment is meant to provide liability management advisory services to the government of Kenya to conduct liability management operations on some external syndicated loans to improve the debt sustainability profile,” the Treasury noted in the new tender notice published on Tuesday.

“Debts held in form of international sovereign bonds are excluded.”

The inclusion of Eurobonds in the planned liability management operations caused jitters among holders of Kenya’s Eurobonds, with yields on existing sovereign bond issuance’s rising in the aftermath of the tender advertisement.

The yields on the Eurobonds, mostly listed on the London Securities Exchange (LSE) however cooled off with only the 12-year issue of 2019 registering a marginal 0.1 rise in yields to 6.7 per cent last week according to data from Reuters.

The sovereign debt advisory sought is expected to review terms and conditions of underlying loan agreements detailing both costs and risks of documented loan contracts.

The review is intertwined with Kenya’s return to the Eurobond market for the first time since 2019.

The country will be seeking to take up nearly Ksh.800 billion from new Eurobond issues in the next 12 months.

Parts of proceeds or about Ksh.540.5 billion ($5 billion) will be deployed towards the external commercial loans restructure process including the retirement of Kenya’s inaugural 2014 Eurobond.

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Story By Kepha Muiruri
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