Amid mounting public pressure over the rising public debt levels, the National Treasury on Thursday, June 17 announced that it had successfully raised Ksh107.9 billion (USD 1 Billion) through issuance of a 12-year Eurobond in the international financial markets.
The bond was over-subscribed with over Ksh582 billion (USD 5.4 billion) offered by investors. The raise followed a 3-day virtual Eurobond roadshow where Kenya’s delegation included Treasury Cabinet Secretary Ukur Yattani, Central Bank of Kenya (CBK) Governor Patrick Njoroge, senior Treasury officials and representatives from Citi and JP Morgan (Joint Lead Managers) as well as NCBA and I&M Banks (Co-Lead Managers).
It was Kenya’s first Eurobond issue in two years, but it likely won’t be the last in the next 18 months. The National Treasury’s borrowing plan as revealed in its submissions to the International Monetary Fund (IMF) had indicated that it was eyeing Sh253 billion in commercial borrowing for project financing from at least two Eurobonds, with another Ksh528 billion of government external debt to be concessional.
On the new bond, Yatani stated that the over-subscription was a sign of strong global investor confidence on Kenya’s economy and medium-term economic prospects.
“The overwhelming response from global investors, reflects the market’s continued confidence in Kenya’s Economic Recovery Programme supported by the IMF and is in line with our Medium-Term Debt Management Strategy approved by Parliament,” the CS noted, adding; “We want to thank investors for their strong participation in the bond issuance.” .
Dr. Harun Sirima, director of the Public Debt Management office, emphasized the need to ensure the country’s borrowing remains on a sustainable path through a cautious approach in contracting commercial borrowing.
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“We went to the market seeking to raise USD 1 billion and stuck to the discipline of our target amount despite the oversubscription and competitive pricing.
“Going forward we are optimistic that Kenya will successfully execute liability management operations in the next fiscal year in line with the debt strategy of lowering cost and minimizing risk in the public debt portfolio,” he asserted.
Representatives for the Joint Lead and Co-Lead managers Citi and JP Morgan, and NCBA and I&M banks respectively, stated that the terms attained in the new issue were competitive and signaled growing appetite for new issues from the continent.
“We thank the Government of Kenya for entrusting us as a consortium through this process, it has been a robust book and a diverse response from investors comprising local, regional and global investors reflecting a strong confidence in Kenya’s economic narrative,” stated Michael Mutiga, Managing Director and Corporate Finance Head for Sub-Saharan Africa at Citi.