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Thursday, February 27, 2020

Kenya takes Sh. 210 billion fresh Eurobond to pay old loans, fund budget

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Eurobond Kenya: Kenya has raised Sh. 210 billion in a new Eurobond that comes in tranches of 7- and 12-year tenors, in an issue that was oversubscribed more than four times, the finance ministry said on Thursday.

This latest bond means that Kenya has received over Sh. 690 billion in Eurobonds in five years only.

READ MORE: Kenya now borrowing from Peter to pay Paul

The seven-year portion of the bond was priced at 7 per cent, while the longer-dated tranche was priced at 8 per cent, well below the initial guidance price of 7.5 per cent and 8.5 per cent respectively, the ministry said.

“The Government of Kenya, acting through the National Treasury and Planning, has successfully priced a new $2.1 billion, dual-tranche Eurobond of 7-year and 12-year tenors on 15th May 2019 in London, United Kingdom,” reads the statement.

The government received bids worth $9.5 billion for the Eurobond from investors, an oversubscription of 4.5 times, the ministry said in the statement from London.

According to the cabinet secretary for the National Treasury Henry Rotich, the new Eurobond will be used to finance the budget and repay Sh. 75 billion 2014 Eurobond that is due to mature in June.

“The proceeds from this issuance will be used to finance some of the development infrastructure projects, the general budgetary expenditure (in accordance with the applicable legal requirements) and to refinance part or all of the obligations outstanding under the $750 million (2014 Eurobond) due on June 24, 2019 and potentially part of the other debt obligations,” he said.

It was widely reported in the local press last week that officials from the National Treasury flew to the US cities of Los Angeles, Boston and New York and London in the UK for roadshows to drum up support for the new bond.

The latest Eurobond adds to the concerns that Kenyans have been raising over President Uhuru Kenyatta’s huge appetite for unserviceable loans that have left the economy exposed.

However, in January this year, President Kenyatta said that he would continue to take loans.

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