Kenya begins marketing five and 10-year sovereign bonds

The details of Kenya's long awaited Eurobond deal can finally be revealed, as investors get their first glimpse at the debut offering.

Kenya has opened the books on a benchmark-sized offering of five and ten-year US-dollar denominated bonds, sources say. The five-year note is being marketed at a low 6 per cent yield, while the 10-year bond is being marketed at a low 7 per cent yield.

Government officials have been on a tour of financial capitals abroad to market the $1.5 billion (Sh128 billion) bond offering. Proceeds from the transaction will go towards general budgetary purposes, including the funding of infrastructure projects. They will also go towards repaying a $600 million (Sh52 billion) loan incurred in 2011/12 that matures in August.

Barclays, JP Morgan, Standard Bank and QNB Capital are the banks lead managing the deal, which is being sold through the Rule 144A and Regulation S formats (144A is a private placement in the US for US investors; Reg S is a Bond issued in the Eurobond market for international investors).

Kenya, which has a sovereign debt rating of B+ from Standard & Poor's and Fitch, had been expected to offer a higher yield on the bonds, traditionally called Eurobonds even though they are typically dollar-denominated.