US, British investors snap up re-opened Sh67.5bn Eurobond
UK investors took up Sh30 billion and those from the US snapped up Sh24 billion. PHOTO | FILE
What you need to know:
The bond, in two tranches of Sh22.5 billion ($250 million) and Sh45 billion ($500 million), saw traders from the UK take up Sh30 billion and those from the US Sh24 billion.
The balance of the money, amounting to Sh13.5 billion, was raised from the rest of Europe as there were no other bidders for the issue.
Investors from the US and the UK took 80 per cent of the Sh67.5 billion ($750 million) re-opened Eurobond, underlining the two countries’ importance to the Kenyan economy.
The bond, in two tranches of Sh22.5 billion ($250 million) and Sh45 billion ($500 million), saw traders from the UK take up Sh30 billion and those from the US Sh24 billion.
The balance of the money, amounting to Sh13.5 billion, was raised from the rest of Europe as there were no other bidders for the issue.
The UK was also the single-largest source of Kenyan imports from Europe in 2013, with US exports to Kenya making strong showing in recent times.
The UK and the US sold to Kenya goods worth Sh49 billion and Sh57 billion respectively last year.
The fixed-income issue was a re-opening of the bond sold in June this year, amounting to Sh180 billion ($2 billion). In terms of investor type, fund managers were the largest takers.
“In terms of distribution by investor type, fund managers held 70 per cent of the $250 million note issues while banks and insurance/pension funds held six per cent of the note issue... fund managers held 83 per cent of the $500 million note issues,” said Treasury secretary Henry Rotich in a statement.
Mr Rotich said the credit from international investors will be invested in energy, transport and agriculture sectors.
In particular, he said, the Galana irrigation project and the Lamu-Kitui-Nairobi power transmission line will benefit from the funds.
Kenya took advantage of its strong credit history and prudent macroeconomic management to getthe bond successfully re-opened, according to the Treasury.
Public debt sustainable
“Investors had confidence in the government’s ability to maintain and consolidate macro-economic stability, improve business climate and implement free-market oriented reforms,” he said.
The country also exploited its rating by Standard & Poor’s and Fitch, which have maintained a sovereign rating of B+ with a stable outlook.
The Treasury chief said that the situation was helped by the fact that Kenya’s current account and budget deficits are manageable and thus do not undermine macroeconomic stability. He said that the public debt was sustainable.
The finance chief maintained the country’s growth trajectory was decent, even in the face of insecurity. “Growth remains resilient with economic growth of a decent 5.7 per cent in 2013 despite the insecurity,” he said.
Kenya got the Sh22.5 billion portion of cash at five per cent and the Sh45 billion at 5.9 per cent, making an average of 5.5 per cent. Mr Rotich said this was a lower price than at which other African countries had raised cash from global markets.
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