Kenya eyes Sh160 billion from new Eurobond

Treasury is expected to raise at least Sh160 billion from the international debt market by issuing its third Eurobond by June.

This will see the Exchequer stay within its target of borrowing Sh287.9 billion from commercial creditors, including international capital market and syndicates of banks in the current financial year.

This will take the sum of Kenya’s issue of dollar-denominated debt since its debut in 2014 to Sh635 billion. Last year, the country raised Sh202 billion ($2 billion) in two tranches with maturity period of 10 and 30 years.

Part of the Sh160 billion will be used to refinance a five-year Eurobond of Sh78 billion that is maturing in June while the rest will be used to fund development expenditure.

So far, the Government has borrowed Sh100 billion from a syndicate of banks, pushing up the country’s share of costly commercial loans.

The money was used to retire another syndicated loan of Sh78.7 billion from Standard Chartered Bank that matured last month.

As part of its Medium Term Debt Management Strategy, Treasury’s preferred strategy is for commercial borrowing to constitute 22 per cent of the external debt.

This, according to Treasury officials, will help the country manage the large repayments falling due for both domestic and external debt in the medium term.

“This composition is to be achieved by external commercial borrowing of $2.79 (Sh279) billion in FY2018/19,” read part of the MTDS, adding that in the 2019/2020 financial year, the country would incur another Sh97 billion from commercial creditors.

Commercial loans to be repaid by June are estimated at Sh200 billion.

In June, Treasury will repay part of the 2014 Eurobond principal, Sh78.3 billion, with reports indicating that Kenya will issue another Eurobond to offset this loan.

“The government also intends to refinance the five-year Eurobond maturing in Financial Year 2018/19, through the issuance of bonds in the international capital markets,” Treasury said in one of its documents.  

[email protected]