Kenya hits the road to market Sh174b bond

Rotich is heading the 10-day international campaign that starts in the United States

Kenya will meet fixed-income investors in the US and UK from June 5 ahead of a potential debut of its US dollar Eurobond, according to a source.

The Government is set to launch its much-delayed bid to raise a $2 billion (Sh174 billion) debut sovereign bond today (Thursday) with a 10-day international campaign starting in the US.

Kenya delayed market entry to raise the fund because of post-election violence that sent growth and foreign investor appetites tumbling in 2008.

The sovereign, rated B+ by Standard & Poor’s and Fitch has hired Barclays, JP Morgan, Standard Bank and QNB Capital to arrange the meetings for a potential benchmark-sized transaction. According to the bond’s preliminary prospectus, the Notes will be offered and sold in denominations of $200,000 or any amount in excess thereof, which is an integral multiple of $1,000.

The payments on the Notes will be made in US dollars without deduction for or on account of taxes imposed or levied by Kenya.

 The Government needs to raise the money to fund heavy infrastructure investment plans as well as to pay off a  $600 million syndicated loan, whose repayment was extended by three months to August 15.

National Treasury is on course to issue a sovereign bond to fund key infrastructure projects and retire some of commercial loans borrowed from foreign banks.

The bond is also expected to act as a benchmark bond to catalyse private sector participation in the international financial market where market conditions are currently favourable for investors in the country.

The UK-based Fitch Ratings has issued a credit rating implying that the country is less vulnerable in the near term and has the capacity to meet its financial obligations.

However, the country still faces uncertainties and exposure to adverse business, financial or economic conditions, which could impair its capacity to meet its debt obligations.

 Fitch Ratings affirmed Kenya’s

Long-term foreign and local currency Issuer Default Ratings (IDR) at ‘B+’ and ‘BB-’ respectively with a Stable Outlook. At the same time the credit rating agency affirmed Kenya’s short-term foreign currency IDR at ‘B’ and Country Ceiling at ‘BB-’.
Fitch pointed out Kenya’s large current account deficit have moderated over the last six months and the firm forecasts a current account deficit of 7.5 per cent of gross domestic product (GDP) by 2015.
The roadshow team lead by Treasury Cabinet Secretary, Henry Rotich, left Kenya late on Tuesday night bound for Los Angeles, according to the sources.