Kenya’s Eurobond issue exceeds target
What you need to know:
- It also defied US and UK advisories over terror attacks and heightened political activities in the country. The sale closed on Monday.
The National Treasury’s effort to raise money in the international market received a major boost after the debt sale was oversubscribed.
Investors have offered to buy $8.8 billion (Sh774 billion) against the government target of $2 billion (about Sh175 billion), making it the largest ever debut Eurobond achieved by an African country.
The fundraising was conducted in two notes — a $500 million five-year bond with an interest rate of 5.9 per cent and another $1.5 billion 10-year note at 6.9 per cent interest.
“Yields were much lower than anticipated, showing prudence in the manner National Treasury cabinet secretary (Henry Rotich) managed the debut,” analysis by lead government advisers noted.
Expectations were that the interest rate would range from eight per cent, with experts betting on 8.5 per cent as the average rate.
The highly successful fund raising comes despite a heavy terrorist attack on northern coastal town Mpeketoni on Sunday night, which left more than 50 people dead and scores injured.
It also defied US and UK advisories over terror attacks and heightened political activities in the country. The sale closed on Monday.
Pension funds, insurers, high net worth individuals and sovereign wealth funds are said to have driven the high demand for Kenya’s Eurobond.
Among the big takers of the debt were listed as Capital Research, Qatar National Bank, Bank of Singapore, Blackrock and Morgan Stanley. The team led by Mr Rotich launched the Eurobond roadshow two weeks ago in the US before heading to London and other markets.
The development now paves the way for listing of the Eurobond on the Irish Stock Exchange to raise money for infrastructural development and paying a syndicated loan due by August.
Part of the money raised will be used to fund the Sh400 billion budget deficit.
