Kenya ready to issue new Eurobond to refinance maturing bond

Treasury Cabinet Secretary Henry Rotich. [Photo, Standard]

NAIROBI, KENYA: Kenya is ready to issue a new Eurobond and also plans to refinance a maturing 5-year dollar bond, Treasury CS Henry Rotich said on Thursday.

Kenya made its international capital markets debut in the summer of 2014, issuing 10- and 5-year tranches that were met by huge investor appetite.

It returned for a 10- and 30-year tranches bond in early 2018 before starting talks with lenders at the beginning of this year on the issuance of a further Sh250billion (USD2.5 billion) worth of bonds.

“You can’t give details about quantum and all that but certainly we are prepared,” Rotich told reporters after giving a speech at an event in the capital Nairobi.

“(With) the Eurobond we want to refinance the maturing debt, which is the five-year which we took in 2014.”

Kenya would get better interest rates if it secured a standby credit arrangement with the International Monetary Fund, replacing another one that expired last year, before it goes to the market, analysts say.

Rotich, however, played down that element.

“Discussions are continuous and with (the IMF facility) or without there is no harm,” he said, adding he expected a final round of talks with the IMF in the next two weeks or so.

News of the upcoming sale sent Kenya’s existing bonds down as much as 1.2 cents, their worst day in more than a month and a half.

“It’s the news they are going to refinance the 2024s,” said Edwin Gutierrez, head of emerging markets sovereign debt at Aberdeen Standard.

The drop also made the existing bonds the worst performers in sub-Saharan Africa, which was generally struggling after high yield sovereign such as Argentina had a torrid day on Wednesday.