Kenya targets diaspora and Asia in next bond issue

Following the success of its debut Eurobond, Kenya plans more fundraising in the international capital markets as soon as next financial year. The financial year starts on July 1.

At a press conference on Wednesday, National Treasury Cabinet Secretary Henry Rotich said the government will diversify the profile of investors by targeting the diaspora, the Middle East and Asian markets.

Kenya raised Sh176 billion ($2 billion) through the sovereign bond with most of the demand coming from hedge fund managers in the United States, the United Kingdom and Europe.

“There are those sovereigns that have been issued and become dormant. I think that is not a good thing. In the next financial year, we have programmed an amount that we would like to borrow externally through the international capital markets,” said Mr Rotich.

Islamic market

He said the government could issue a Sukuk targeting the Islamic market. A Sukuk is the Islamic equivalent of a bond that complies with Sharia laws that forbid interest. Instead of making money through interests, investors are granted ownership of an asset from which they can then earn revenues from the assets.

According to the Islamic Development Bank, Sukuk profile as a means of raising money is rising given the relative resilience experienced during the height of the economic crisis.

Britain recently raised Sh29.7 billion (£200 million) through an Islamic bond.

The issue was oversubscribed 10 times attracting orders of about Sh342.6 billion (£2.3 billion), according to the Financial Times newspaper.

Samurai bond

In the Asian markets, Kenya may issue a Samurai bond.

This is a Yen-denominated bond that is subject to Japanese regulations. After a slow down, investor demand for Samurai bonds is on the rise.

According to Bloomberg, British bank Barclays Plc has announced intentions to issue a Samurai bond. Earlier this year, Morgan Stanley issued Samurai bonds valued at $1.5 billion, the first such issue since 2008.