Kenya has raised $1.5 billion from creditors in the latest Eurobond sale to help clear its public debt stock.Citigroup Inc. and Standard Bank Group Ltd. are handling the sale of the 11 year notes which will mature in March 2036 with an interest of 9.5 percent.
Earlier this week, Kenya announced that it would sell additional dollar bonds to pay for the 2027 repurchase of $900 million in eurobonds.
Kenya has been managing its debt maturity profile since last year, when its finances were severely strained.The country has gained breathing room against large debt repayment requirements in April and May by choosing to refinance a portion of its 2019 Eurobond and three Treasury bonds through buybacks.
The government has eliminated a total of $687.5 million in maturities from April and May through the buybacks, bringing the total amount of external and domestic debt redemptions to $3.44 billion.
Beginning in May of this year and continuing through May of next year, the repayment of the seven-year, $900 million Eurobond, which was sold in May 2019 at a seven percent interest rate, was spread out (amortized) in three equal tranches of $300 million.
Kenya’s National Treasury says it needs about $26 billion over the next decade to pay off maturing foreign debts and another $1.5 billion annually for external interest payments.
“The decision to issue a new bond now would make sense particularly if the authorities are considering stepping away from a funded IMF program when the current comes to an end, which could lead to spread widening,” said BancTrust & Co. in a research note.
A mission team from the International Monetary Fund is anticipated in Nairobi soon to conduct a final evaluation of the $3.6 billion program, which is set to end on April 1. According to Kenya, discussions are also under progress about a replacement scheme.
