Kenya taps Sh70bn from global markets to finance key projects
Treasury Cabinet Secretary Henry Rotich. Treasury is banking on a Bill that is before Parliament to increase the absorption rate of development funds to at least 80 per cent, by giving Cabinet secretaries more powers in procurement. PHOTO | NATION MEDIA GROUP
What you need to know:
- National Treasury Cabinet secretary Henry Rotich said the additional amount will be channelled in energy, transport and agriculture projects.
- The money is already at the Central Bank having been received on Wednesday.
- The issue was oversubscribed by 400 per cent giving the country a discount on the Sh175 billion received in June.
- The bond attracted $3 billion against the $750 million amount targeted, which is 400 per cent over-subscription.
Kenya has tapped the international market again borrowing about Sh70 billion as financing of state’s big projects continue to weigh heavily on government coffers.
Giving details Friday, National Treasury Cabinet Secretary Henry Rotich said the additional amount will be channelled in energy, transport and agriculture projects.
“I wish to inform Kenyans that we have just issued a $750 million (Sh67 billion) international sovereign bond on the back of the bond we issued on June 24 through a process called a Tap, which means re-opening the bond. This transaction is therefore a follow up of the inaugural $2 billion,” Mr Rotich said.
The money is already at the Central Bank having been received on Wednesday.
The issue was oversubscribed by 400 per cent giving the country a discount on the Sh175 billion received in June.
“Due to the favourable yields, Kenya received a premium of $44 million (Sh4 billion) on the issue.
GEOGRAPHIC INVESTOR
On the same note, there was widespread geographic investor coverage led by investors from Europe, mainly from UK and America,” Mr Rotich said.
The issue comprised of a bond for $250 million with a five-year maturity at an interest rate of five per cent and $500 million with a 10-year maturity at an interest rate of 5.9 per cent.
The inaugural bond issued in June was priced at 5.9 per cent for the five-year bond and 6.9 per cent for the 10-year bond.
Mr Rotich said the re-opening of the bond was cheaper and faster way of raising funds as it was riding on the marketing of the inaugural bond with the lead banks staying in contact with investors who were expected to invest in the issue.
OVER-SUBSCRIPTION
As a result, the bond attracted $3 billion against the $750 million amount targeted, which is 400 per cent over-subscription.
“The over-subscription is an indication that foreign investors continue to have confidence in the future prospects of our country.
During pricing, we chose an appropriate deal size of $750 million as per our original plans.
“I am pleased to report that the bond is performing well in the secondary market in the Irish Stock Exchange with good liquidity and trading at a premium.
He said the debt levels in the country were sustainable and talks with International Monetary Fund on providing a cushion against shocks was already completed and only approval by the Fund’s board was awaited early next year.
