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Kenya revs up for second Eurobond amid concerns

By Paul Wafula | October 27th 2016 at 12:00:00 GMT +0300

Treasury PS Kamau Thugge when he appeared before the Senate Assembly Finance Committee at County Hall, Nairobi yesterday. Kenya has begun preparing for a second Eurobond to raise an unspecified amount of money from international capital markets. (PHOTO: BONIFACE OKENDO/ STANDARD)

Kenya has begun preparing for a second Eurobond to raise an unspecified amount of money from international capital markets.

National Treasury said its officials recently returned from “non-deal road shows” in New York and Boston.

“The reason for the road shows was to keep investors informed about the developments taking place in the country. We also wanted to reduce uncertainty, which helps investors have stronger demand for the paper,” said Treasury Principal Secretary Kamau Thugge (pictured) yesterday.

He, however, declined to comment on when and how much money the Government plans to raise or the tenure of the loan, saying divulging more details could jeopardise the process.

“I’m not allowed to give such details at this point,” he said when asked about the specifics.

The development comes hardly two weeks after CORD leader Raila Odinga warned the international community against participating in the bond issue, claiming there had been failure to account for the proceeds of the first issue in 2014.

It also comes at a time when the Government is on the spot over the country’s soaring foreign debt.


Dr Thugge defended the Government on how the first Eurobond of Sh250 billion was raised and utilised.

He explained that the bond was raised in two batches, with the first installment of Sh176 billion received in June 2014.

Thugge, who provided bank statements to back up his claims, said the Government withdrew Sh34.6 billion to meet some pending bills from the previous financial year.

Another Sh53.2 billion was used to pay a syndicated loan that had already matured. This, according to the technocrat’s explanation, left the Government’s account at the Central Bank of Kenya (CBK) with Sh88.4 billion, which was withdrawn on various dates and disbursed to ministries on request.

He said following the success of the first issue, which was oversubscribed by over 400 per cent, the Government returned to the international markets for the second installment in December 2014, which raised another Sh73.8 billion.

Thugge said the Government treated all the proceeds from the two issues the same way - receiving the money into one collecting account, selling the dollars to CBK, which credited the equivalent to a special Eurobond account in the consolidated fund.

From this account, money was disbursed to various ministries.

“All the transactions were done the same way. If someone is questioning, then you should question all of them or none at all,” Thugge said.

He said more than 70 per cent of the money that remained after the Government paid off the syndicated loan was used to fund the development budget. He did not give a list of the development projects the money was used on.

Treasury said it was difficult for various ministries to differentiate between money received on the basis of what came from the Eurobond and other sources.

“The objectives of the Eurobond are to diversify funding sources of the budget and stop over reliance on multi-lateral institutions that have many conditions. When we issued the 2014 Eurobond, we also wanted to reduce pressure on interest rates and stabilise exchange rates,” Thugge said.

Eurobond loans National Treasury
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