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Treasury on US roadshow to market bond to raise between Sh150b and Sh300b

By Otiato Guguyu | Published Wed, February 14th 2018 at 00:00, Updated February 13th 2018 at 21:44 GMT +3
Cabinet Secretary of the National Treasury Henry Rotich. [Photo: Wilberforce Okwiri]

Kenya’s planned eurobond issue got a boost after two ratings agencies contracted by Treasury gave it a positive outlook.

Fitch and S&P both said Kenya’s long-term debt was stable at B+, which means the country is less likely to default on the debt.

“S&P Global Ratings said today that it has assigned its ‘B+’ long-term issue rating to the proposed US dollar-denominated eurobond to be issued by the Republic of Kenya,” the agency said on its website.

Senior officials of the National Treasury are in the United States for a eurobond roadshow seeking between $1.5 (Sh150 billion) and $3 billion (Sh300 billion), which is expected to test investors’ appetite and the rates at which they will be willing to take up the debt.

S&P says the amount and interest rate, among other details of the bond, will be determined during the placement.

Only Moody’s, an independent credit auditor, had indicated it could review Kenya’s credit downwards citing persistent deficits and high borrowing costs that continue to drive government indebtedness higher.

“Moody’s is just doing freelance rating. We only have two contracted ratings agencies — Standard & Poor’s and Fitch,” said Cabinet Secretary Henry Rotich last year.

Save for pricing, credit ratings have, however, diminished in influencing whether a bond gets taken up or not.

Junk-rated emerging market sovereigns raised $75 billion (Sh7.5 trillion) in syndicated bonds last year, up 50 per cent year on year to the highest total on record, according to figures from Dealogic, a data provider.

“The increase has improved the total volume of debt-raising by developing economies, with non-investment grade issuance making up to 40 per cent of the new debt syndicated in Emerging Markets (EM) so far in 2017,” the Capital Markets Authority (CMA) said in the soundness report.

CMA says the developments in Argentina, Iraq, Greece, Nigeria, Ukraine, Bahrain, and Takijistan have been attributed to attractive pricing of EM bonds, expanding economies in the emerging markets, as well as diversification benefits.


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