The Jubilee government is on it again, this time with disturbing news of the sale of $2bn of Eurobonds, partly to repay a $750bn due to mature in June.
This has raised questions about the govt’s ability to service its mounting debt burden. Public debt has risen to nearly 60% of national output, up from below 40% in 2013.
Kenya sells third Sh210bn Eurobond https://t.co/EXGgFMHswy
— Daily Nation (@dailynation) May 16, 2019
Kenya has borrowed heavily from China to fund a $4.8bn railway scheme, the country’s largest infrastructure project since its independence from Britain in 1963.
As a result, Kenya’s debt servicing costs will consume one-third of the government’s revenues this year, according to the Nairobi-based Institute of Economic Affairs. That is one of the highest ratios in sub-Saharan Africa.
According to Financial Times, Kenya is expected to sell seven-year and 12-year bonds — its third such issuance in five years. It has dropped plans to issue a 31-year tranche it had earlier marketed.
The Kenyan treasury, which said on Wednesday it had orders of at least $6bn, indicated that the seven-year bond was likely to be priced at about 7.25 percent and the 12-year paper at 8.25 percent.
The latter is a step up from the 7.25 percent coupon that a 10-year Kenyan bond carried when the country last came to the market in February 2018, according to Kevin Daly, emerging market bond fund manager at Aberdeen Standard Investments.
After this Eurobond thingy am now convinced that very soon we shall not have control over the Mombasa port or JKIA. Watch this space
— Denogrant (@Denogrant_) May 16, 2019